Department of Homeland Security
 

Transportation Security Administration 


Logistics Center – Inventory Management 


OIG-13-82 April 2013
 
 

     

  

         

      

   

       

ds

ector General for Audits

           

                       

                  

               

                     

                      

                          

                   

                               

                         

                      

                         

                      

           

                         

                   

                            

     

                             

              

   

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

 Washington, DC 20528 / www.oig.dhs.gov 

APR 26 2013

MEMORANDUM FOR:	 John W. Halinski

Deputy Administrator

Transportation Security Administration

FROM:	 Anne L. Richar

Assistant Insp

SUBJECT:	 Transportation Security Administration Logistics Center –

Inventory Management

Attached for your action is our final report, Transportation Security Administration Logistics

Center – Inventory Management. We incorporated the formal comments from the

Transportation Security Administration in the final report.

The report contains two recommendations aimed at improving inventory management at

the Logistics Center. Your office concurred with one recommendation and partially

concurred with the other. As prescribed by the Department of Homeland Security Directive

077‐01, Follow‐Up and Resolutions for Office of Inspector General Report Recommendations,

within 90 days of the date of this memorandum, please provide our office with a written

response that includes your (1) agreement or disagreement, (2) corrective action plan, and

(3) target completion date for each recommendation. Also, please include responsible

parties and any other supporting documentation necessary about the current status of the

recommendation. Until your response is received and evaluated, the recommendations will

be considered open and unresolved.

Consistent with our responsibility under the Inspector General Act, we are providing copies

of our report to appropriate congressional committees with oversight and appropriation

responsibility over the Department of Homeland Security. We will post the report on our

website for public dissemination.

Please call me with any questions, or your staff may contact Mark Bell, Deputy Assistant

Inspector General for Audits, at (202) 254‐4100.

Attachment
 

 

 

 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Table of Contents 

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

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

Results of Audit ................................................................................................................... 4 

TSA Inventory Management ................................................................................... 4 

Planned TSA Actions ............................................................................................ 11 

Recommendations ............................................................................................... 12 

Management Comments and OIG Analysis ......................................................... 12 

Appendixes 

Appendix A: Objectives, Scope, and Methodology ............................................ 15 

Appendix B: Management Comments to the Draft Report ............................... 16 

Appendix C: Warehouse Inventory Aging ......................................................... 20 

Appendix D: Major Contributors to This Report ................................................ 21 

Appendix E: Report Distribution ........................................................................ 22 

Abbreviations 

Auto EDS automated explosive detection system 

DHS Department of Homeland Security 

EDS explosive detection system 

ETD explosive trace detection 

FFE furniture, fixtures, and equipment 

OIG Office of Inspector General 

PER peripheral equipment 

TSA Transportation Security Administration 

TSE transportation security equipment 
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Executive Summary 

The Transportation Security Administration (TSA) operates three warehouses in Texas, 

collectively known as the TSA Logistics Center. The warehouses store various types of 

Government equipment used at airports to screen passengers and baggage. Equipment 

used at airports, but not specifically used for screening operations, is also stored in the 

warehouses. As of May 31, 2012, TSA had more than 17,000 items in its warehouse 

inventory, with an estimated cost of $185.7 million. We performed this audit to 

determine whether TSA effectively managed the Logistics Center.

Although TSA has improved accountability of screening equipment at the Logistics 

Center, its plans and procedures for inventory management need additional 

improvements. Specifically, TSA stored unusable or obsolete equipment, maintained 

inappropriate safety stock levels, and did not develop an inventory management 

process that systematically deploys equipment. Additionally, TSA did not use all storage 

space within the Logistics Center. As a result, TSA may be losing utility of equipment as 

it ages and may be able to put approximately $800,000 per year—used to lease two 

warehouses—to better use. 

In response to our audit, TSA indicated that it was planning additional improvements to 

warehouse operations. TSA determined that it will not need one of its three warehouses 

after January 2013, when the lease expires, and in July 2012 it drafted a plan to reduce 

leased space. Allowing the lease to expire will reduce TSA’s warehouse annual lease 

costs. Additionally, TSA drafted a revision of its Security Equipment Management 

Manual to include additional guidance on managing warehouse space and inventory. 

We made two recommendations to TSA that, when implemented, should assist the 

component with managing inventory in its warehouses. TSA concurred with one 

recommendation and partially concurred with the other. 

www.oig.dhs.gov 1 OIG-13-82
 
 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Background 

TSA operated three warehouses in Texas, collectively known as the TSA Logistics Center 

(Logistics Center).1

 The Logistics Center stored various types of equipment used for 

screening passengers and baggage. The equipment included x-ray units, metal 

detectors, explosive trace detection (ETD) units, and explosive detection systems (EDSs). 

Nonscreening equipment (about 8 percent of the monetary amount of inventory items) 

stored at the Logistics Center included furniture, equipment cases, conveyors, and floor 

mats. As of May 31, 2012, TSA had more than 17,000 items, valued at about 

$185.7 million, stored at the Logistics Center. Table 1 shows a breakdown of the 

quantity of items stored by equipment type and the recorded value. 

Table 1. Warehouse Inventory as of May 31, 2012

Type of Equipment Quantity Dollar Value 

Recorded 

Transportation Security Equipment (TSE) 1,790 $118,569,244

Peripheral Equipment (PER) 576 $6,587,254

Furniture, Fixtures, and Equipment (FFE) 10,882 $4,523,188

Items on Hold 67 $1,232,864

Transportation Security Equipment Pending Disposal2 972 $50,725,044

Non-screening Equipment Pending Disposal 2,717 $4,040,160

Total 17,004 $185,677,754

Source: Department of Homeland Security Office of Inspector General analysis of TSA data.

Table 2. Types of Equipments stored at the Logistics Center

Type Description 

TSE Equipment used to screen passengers, baggage, and cargo for threats to the 

transportation system 

PER 

Equipment that does not screen for threats but that is deployed and used 

with other screening equipment (e.g., EDS conveyors and x-ray viewing 

stations) 

FFE Miscellaneous ancillary items used in or related to the screening environment 

(e.g., chairs, tables, stanchions)

Items on Hold Equipment that has been allocated for a purpose (e.g., deployment) and is 

therefore not available for other purposes

TSE Pending Disposal TSE that has been designated for reutilization or disposal

Non-TSE Pending Disposal Nonscreening equipment that has been designated for reutilization or 

disposal 

Source: TSA.

1

 TSA also operates warehouses in New Jersey and Virginia. We plan to conduct audit work on the 

management of these warehouse facilities in the future. 

2

 Examples of TSE pending disposal include EDS (listed value $21.7 million), ETD ($20.6 million), Threat 

Image Projection x-ray units ($5.7 million), and Bottle Liquid Scanners ($2.5 million). 

www.oig.dhs.gov 2 OIG-13-82
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

TSA leased three warehouses comprising approximately 443,000 square feet. The 

annual cost for the warehouses was $1.8 million. Table 3 shows the Logistics Center 

lease information. Since 2010, TSA has spent about $5.5 million to lease warehouse 

space. 

Table 3. Logistics Center Lease Information 

Warehouse Square Feet Annual Lease

Cost Lease Expiration

1 233,740 $1,021,444 September 2014 

2 100,000 383,040 January 2013 

3 109,750 421,441 September 2014 

Total 443,490 $1,825,925

Source: TSA.

TSA spends an additional $1.4 million annually on a contract to operate the warehouses 

and provide inventory support services. The contractor is responsible for warehouse 

functions such as receiving, staging, storing, distributing, shipping, and disposal. In 

addition to warehouse operations and management, the contractor conducts an annual 

inventory. 

We performed this audit as a result of a May 2012 congressional hearing on TSA 

procurement, deployment, and storage of airport security-related equipment. The 

hearing discussed a report titled Airport Insecurity: TSA’s Failure To Cost-Effectively 

Procure, Deploy, and Warehouse Its Screening Technologies, issued by the joint majority 

staff from the House Committee on Oversight and Government Reform and the House 

Committee on Transportation and Infrastructure. 

The hearing also discussed the Department of Homeland Security (DHS) Office of 

Inspector General (OIG) report, Management of the Transportation Security 

Administration’s Logistics Center, issued in 2009.3 The report concluded that TSA did 

not efficiently deploy, redeploy, or dispose of transportation security equipment 

through its Logistics Center. Specifically, the report addressed quantity of equipment 

and time in storage at the Logistics Center, and it recommended that TSA develop, 

implement, and monitor procedures for deployment, redeployment, and disposal of

transportation security equipment, and periodically assess inventory to make sure 

inventory is correctly classified. Although TSA developed policies and procedures to 

address the report’s recommendations, we identified similar findings during this review. 

3 OIG-10-14, Management of the Transportation Security Administration’s Logistics Center, November 2009, 

http://www.oig.dhs.gov. 

www.oig.dhs.gov 3 OIG-13-82
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Results of Audit 

TSA has improved accountability of screening equipment at the Logistics Center; 

however, its plans and procedures for inventory management need additional 

improvements. Specifically, TSA stored unusable or obsolete equipment, maintained 

inappropriate safety stock levels, and did not develop an inventory management 

process that systematically deploys screening equipment. Additionally, TSA did not use 

all storage space within the Logistics Center. As a result, TSA may be losing utility of 

equipment as it ages and annually funding approximately $800,000 of unneeded 

warehouse space. 

TSA Inventory Management

Equipment in Storage 

TSA had unusable, obsolete equipment and equipment that exceeded safety 

stock requirements stored at the Logistics Center. As of May 31, 2012, TSA had 

17,004 items stored at the Logistics Center. TSA divides the inventory into three 

types or categories: 

•

•

•

Transportation Security Equipment (TSE), 

Peripheral Equipment (PER), and

Furniture, Fixtures, and Equipment (FFE). 

Within the inventory categories, TSA designates 

condition codes for individual items held in 

inventory. Items in the warehouse designated “on-hold” are allocated for a 

specific purpose. Table 4 shows the length of time TSA stored the equipment at 

the Logistics Center as of May 31, 2012. 

Table 4. Length of Time TSA Stored Equipment at the Logistics Center 

Equipment Condition Codes 

1 – new, 

4 – used, 

7 – used and needs repair, and 

X – disposal. 

Source: TSA 

Condition Code S 1 year >1 year and 

< 2 years � 2 years Quantity Dollar Value Recorded 

1 – New 3,860 1,794 3,238 8,892 $68,849,602

4 – Used 1,516 916 166 2,598 31,674,397

7 – Needs 

Repair 1,400 300 58 1,758 29,155,687

On-Hold 49 16 2 67 1,232,864 

X – Disposal 2,701 628 360 3,689 54,765,204

Total 9,526 3,654 3,824 17,004 $185,677,754

Source: DHS OIG analysis of TSA data.

www.oig.dhs.gov 4 OIG-13-82
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Table 4 shows that TSA stored approximately 22 percent or 3,824 of 17,004 

items, in the warehouse for more than 2 years. Appendix C provides additional 

information by category and condition code on the length of time equipment 

remained in the warehouse. Table 5 shows that of the equipment stored at the 

Logistics Center for more than 2 years that was not on hold or pending disposal, 

100 items were TSE. 

Table 5. TSE Stored at Logistics Center for More Than 2 Years (24 Months) as 

of May 31, 2012

Description Qty Storage Time 

(in months) 

Dollar Value

Recorded 

Explosive Trace Detector 48 24–60 $1,632,000

Enhanced Metal Detector 33 30–69 247,500

Threat Image Projection Ready X-Ray 11 36–48 375,562

Explosive Detection System

(including three new Auto EDSs) 7 31–47 5,741,500 

Bottle Liquid Scanner 1 35 0

Total 100 $7,996,562

Source: DHS OIG analysis of TSA data.

The quantity of TSE stored in the warehouse for more than 2 years accounted for 

approximately one-half percent of 17,004 items in the warehouse, yet it 

represented almost $8 million, or 4 percent of the dollar value recorded for all 

inventory in the warehouse. This illustrates that increased quantities of TSE 

stored at the warehouse may significantly increase the dollar value of inventory. 

Further, this may result in millions of dollars worth of screening equipment 

becoming obsolete or unusable while stored for an extended period. 

With prolonged storage, TSA lost utility of equipment as it aged in storage. As of 

May 31, 2012, TSA had 12 automated explosive detection system (Auto EDS) 

units at the warehouse, including three new units stored at the warehouse for 

more than 3 years. According to one TSA official, the component does not plan 

to deploy the Auto EDS units that sat in storage. In 2007, TSA awarded contracts 

to acquire Auto EDSs to provide baggage-screening technology for checkpoints. 

However, TSA officials explained that other checkpoint technology screened 

baggage faster and required less space than the Auto EDS, and as of November 

2012, TSA removed all Auto EDS units from airports. The recorded value of the 

eight Auto EDS units stored at the warehouse in November 2012 was 

approximately $3.7 million. Upgrades for the Auto EDS units in the warehouse 

were about $1 million. The Auto EDS units became obsolete while aging in the 

warehouse. 

www.oig.dhs.gov 5 OIG-13-82
 
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

TSA also stored nonscreening equipment in the warehouse for long periods. 

Specifically, TSA stored more than 3,200 FFE items in the warehouse for more 

than 2 years. Examples include 294 wastebaskets stored for more than 7 years, 

and 41 empty crates—used for various pieces of screening equipment—stored 

for more than 2 years. Table 6 shows examples of nonscreening items that TSA 

stored for more than 2 years. 

Table 6. Examples of Non TSE Stored at Logistics Center for Longer Than 2 Years 

(24 Months) 

Description Condition 

Code(s) Qty Storage Time (Months)

L3 AC Noise Reduction Kit and L3 Remote BVS Kit 1 3 26-88 

Wastebasket 1 294 87

Conveyor (Power, Exit, Extension, Entry, Bracket,

Extension, and Pedestal) 

1 and 4 131 24-67

Reveal Master Control Client Kits and NETGEAR 

Switches (EDS Ancillary Items) 

1 and 4 22 26-60

Rolling Itemiser (ETD) Case 4 17 51-58 

Empty Equipment Crates 1 and 4 41 28-55

Source: DHS OIG analysis of TSA data.

TSA’s warehouse inventory also included obsolete items. The inventory showed 

that TSA had 266 Threat Image Projection Ready x-ray units in the warehouse.

The machine, used to screen carry-on baggage, is obsolete technology, being 

replaced by Advanced Technology and Advanced Technology 2 x-rays. TSA also 

warehoused five new whole body imager training simulators (laptop computers) 

for more than 3 years. TSA replaced the whole body imager with advanced 

imaging technology units and never used these laptop simulators. 

Safety Stock

TSA did not have appropriate safety stock levels Safety Stock: Inventory that is at the Logistics Center to meet its safety stock carried to prevent a shortage of 

requirements. TSA relied on nondeployable critical equipment. TSA does 

equipment, had insufficient quantities of some not consider equipment with a 

known deployment site to be equipment, and excessive quantities for other safety stock. equipment. TSA holds safety stock as insurance 

against uncertainties such as equipment failure, Source: TSA. 

emerging requirements, or special events. 

Adequate safety stock levels permit TSA to respond to maintenance needs while 

minimizing the adverse affect on screening operations. 

www.oig.dhs.gov 6	 OIG-13-82
 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

TSA relied on nondeployable screening equipment to meet safety stock 

requirements. For example, the target safety stock level for one type of bottle 

liquid scanner was 18 units. The warehouse inventory report for the third 

quarter of fiscal year 2012 also showed 18 units designated as safety stock; 

however, 10 of the 18 units needed repair and were nondeployable. Based on 

the number of bottle liquid scanner units designated as safety stock in inventory 

and the condition codes assigned to them, only eight units were in redeployment 

condition. TSA officials said that safety stock quantities and levels are evaluated 

and updated every quarter in conjunction with the quarterly warehouse 

disposition process. We identified equipment designated as safety stock stayed 

at condition code 7, or repair needed, on consecutive warehouse inventory 

reports. 

In February 2012, TSA evaluated safety stock inventory for nine types of EDS and 

determined that the quantity of safety stock was deficient for six of the nine 

types. For example, TSA set the level of safety stock for one type of EDS actively 

under production and deployment at five units. Although TSA had 12 of these 

units in the warehouse, none were designated as safety stock. TSA’s ability to 

respond to critical failures for this piece of equipment is affected by not having 

equipment available for safety stock. 

TSA also assessed checkpoint technology safety stock in July 2012 and identified 

equipment with a shortage of warehouse safety stock, as well as equipment in 

inventory that exceeds the safety stock target. Table 7 shows that TSA’s review 

identified a safety stock shortage for six types of passenger checkpoint screening 

equipment.

Table 7. Safety Stock Shortage—Checkpoint Technology 

Technology Quantity in 

Inventory 

Safety Stock 

Target Difference 

Advanced Imaging Technology-Rapiscan 1 8 -7 

Advanced Imaging Technology-L3 1 12 -11 

ETD Smiths 500DT 6 25 -19

ETD Itemiser II (Includes Passenger and

Baggage Screening Units) 

69 85 -16 

Bottle Liquid Scanner-CEIA 9 22 -13 

Advanced Technology X-Ray 1 3 -2 

Source: TSA.

TSA also stored empty ETD cases (exhibit 1) in quantities that exceed its stated 

level for safety stock. TSA’s July 2012 review showed almost 1,400 more empty 

cases in inventory than were necessary to meet the target safety stock level of 

459. TSA officials explained that after ETD units were placed in service, airports 

www.oig.dhs.gov 7 OIG-13-82
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

sent the empty cases to the warehouse for storage. Some of the empty cases 

were stored in the warehouse for almost 5 years. To optimize existing 

warehouse space, TSA could have recycled or removed the cases from inventory. 

Exhibit 1. Empty ETD Cases 

Source: DHS OIG. 

Without appropriate safety stock levels, TSA was not prepared to meet 

equipment emergencies that could affect field operations and national security, 

or increase travelers’ time spent at passenger screening checkpoints.

Inventory Deployment

TSA did not use a systematic inventory method for deploying screening 

equipment from the warehouse. Instead, according to TSA officials, the 

component requests equipment from the Logistics Center by serial number. This 

method does not provide for a disciplined rotation and valuation of warehouse 

inventory. An example of a systematic inventory deployment process includes 

first in-first out, which selects screening equipment that has been in the 

warehouse longest for deployment first. This process ensures that warehouse 

storage time is minimized. 

We identified examples where TSA deployed screening equipment without a 

logical or systematic method. For example, TSA deployed one EDS unit that was 

stored in the warehouse for 1 month, even though two additional units had been 

in storage for 21 and 31 months each. TSA also deployed an enhanced metal 

detector that had been stored for only 3 months when another had been in the 

warehouse for more than 4 years. These examples show weak inventory 

www.oig.dhs.gov 8 OIG-13-82
 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

management and deployment procedures that may lead to a loss of screening 

equipment utility through long shelf time. 

Unused Warehouse Space 

TSA did not use all storage space within the Logistics Center. According to an 

April 2012 TSA report of Logistics Center space usage, TSA did not use all

available floor and shelf space at the three facilities. Specifically, TSA did not use 

72,074 square feet (about 16 percent) of the approximately 440,000 square feet 

of floor space. TSA was paying for unused space that equates to an area larger 

than a football field. Exhibit 2 shows the empty floor space in Logistics Center 2. 

According to TSA, the component used the empty floor space as a training area 

for its canine handlers. TSA officials explained that the component will not 

renew the warehouse lease when it expires in January 2013. In September 2012, 

TSA notified the warehouse owner that it did not intend to renew the lease; 

however, TSA could not provide us with documentation of a formal, approved 

plan for its future warehousing needs. 

Exhibit 2. Warehouse 2 Unused Floor Space 

Source: DHS OIG. 

The April 2012 report also showed that TSA did not use 2,142 (64 percent) of 

3,344 available shelves. Exhibit 3 shows unused shelf space. 

www.oig.dhs.gov 9 OIG-13-82
 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Exhibit 3. Warehouse 1 Unused Shelf Space 

Source: DHS OIG. 

Without an effective inventory management process, TSA cannot accurately 

estimate the space required for equipment storage and minimize warehouse 

leasing expenses. 

Inventory Policies and Procedures 

TSA’s guidance for inventory management did not clearly articulate inventory 

procedures. TSA’s Personal Property Management Manual and Security 

Equipment Management Manual did not prescribe detailed guidance for 

inventory management at the Logistics Center. The Personal Property 

Management Manual provides overall TSA guidance for management of personal 

property. It establishes property management principles, such as— 

• Maximizing return on investment; 

• Managing inventory effectively; 

• Minimizing the cost of management systems; 

• Making excess property the first source of supply; and 

• Maximizing reuse. 

TSA’s Personal Property Management Manual also defines personal property, as 

well as accountability and capitalization thresholds, and establishes roles and 

responsibilities. 

www.oig.dhs.gov 10 OIG-13-82
 
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Additionally, the Office of Security Capabilities 

issued the Security Equipment Management 

Manual, which describes the processes and 

procedures to account for personal property 

throughout its life cycle.4 It applies to TSE, PER, 

and FFE purchased or leased by the Office of 

Security Capabilities. 

Personal Property: Tangible 

property, such as equipment, 

materials, and supplies that 

can be moved from place to 

place. 

Source: TSA. 

The Security Equipment Management Manual also describes roles, 

responsibilities, and warehouse operational procedures, but does not include 

detailed procedures for warehouse inventory management related to 

redeployment of warehouse equipment and safety stock requirements. For 

example, chapter 7 of the manual addresses Logistics Center procedures such as 

hours of operation, receiving, periodic inventories, and the warehouse property 

management system. The chapter also addresses selecting, staging, and 

distributing equipment. It requires the contractor to identify the property for 

issue and provide documentation to the property custodian to update TSA’s 

property system, but does not address the inventory method the contractor 

should use to select the requested equipment. 

The manual assigns responsibilities for Logistics Center property management to 

a property custodian, and instructs the property custodian to provide a quarterly 

inventory list to the equipment contracting officer’s representatives for review, 

and to update records accordingly. Although TSA provided records to show that 

quarterly reviews occurred, without clear, detailed warehouse inventory 

management policies and procedures, TSA may be losing utility of equipment as 

it ages and paying for unused warehouse space. 

Planned TSA Actions

Warehouse Leases 

In July 2012, TSA drafted plans to reduce the number of warehouses it leased. 

TSA explained that it would not need warehouse space used for storing 

American Recovery and Reinvestment Act of 2009 procurements after January 

2013, when the lease agreement expires. This will reduce TSA’s warehouse 

space by 100,000 square feet and annual lease costs by $383,000. TSA also 

reported that it expanded the amount of new equipment shipped directly from 

the manufacturer to airports. This will also reduce storage space requirements. 

4

 Logistics Center operations are managed by the Operations Support Division within TSA’s Office of 

Security Capabilities.

www.oig.dhs.gov 11 OIG-13-82
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

TSA plans to consolidate all equipment into a single warehouse by January 31, 

2013, and to review the feasibility of terminating the lease for the third 

warehouse prior to its scheduled expiration in September 2014. Eliminating the 

third warehouse would further reduce TSA’s storage space by almost 110,000 

square feet and leasing costs by approximately $421,000. By October 2014, TSA 

should have a lease agreement for one warehouse, reducing the component’s 

costs by approximately $800,000 per year.

Security Equipment Management Manual 

TSA is updating its Security Equipment Management Manual, and the updated 

version will include additional guidance on warehouse management. The 

revised manual will reflect the Office of Security Capabilities’ new organizational 

structure and provide guidance on safety stock, quarterly reviews, inventory 

deployment, and disposal. 

Recommendations 

We recommend that the Deputy Administrator, Transportation Security 

Administration: 

Recommendation #1:

Implement detailed inventory management procedures for equipment at the 

Transportation Security Administration Logistics Center. 

Recommendation #2: 

Develop and implement procedures to assess and adjust warehouse space on an 

annual basis. 

Management Comments and OIG Analysis 

TSA provided comments to the draft of this report. When appropriate, we made 

changes to reflect the suggested revisions. According to its response to the draft 

report, TSA agreed with our recommendations. TSA also provided additional 

information for four sections of the draft report: Equipment in Storage, Safety 

Stock, Inventory Deployment, and Unused Warehouse Space. A summary of the 

responses and our analysis follows. We included a copy of the management 

comments in their entirety in appendix B. 

www.oig.dhs.gov 12 OIG-13-82
 
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

In its comments to the draft report, TSA asserts that OIG did not sufficiently 

recognize warehouse space requirements fluctuate. TSA further explained that a 

2011 report on warehouse space usage shows only 1 percent of warehouse space

was unused. In its comments, TSA did not recognize that the component used 

the Logistics Center to temporarily store equipment funded by the American 

Recovery and Reinvestment Act of 2009 instead of directly shipping the 

equipment from the manufacturer to the airports. In its February 2013 update 

to the Security Equipment Management Manual, TSA emphasized that 

component personnel should ship property directly from the manufacturer to 

the airport sites whenever possible to minimize the use of the Logistics Center as 

an interim staging location. This process should lessen large fluctuations of 

equipment in the warehouse. 

TSA commented that the Exhibit 2 photograph is misleading, as it does not 

recognize that TSA intentionally removed equipment from Logistics Center 2 in 

its efforts to reduce space. TSA also clarified that the component used the 

empty warehouse space for canine handlers on one occasion. Our report 

recognizes TSA planned to reduce warehouse space and did not intend to renew 

the lease for Logistics Center 2. Additionally, while we agree TSA used Logistics 

Center 2 to store screening equipment, warehouse floor space was set up for 

canine training during our site visit to the facility in June 2012. 

Response to Recommendation #1: TSA concurs. The component adopted and 

implemented an inventory management policy to issue equipment on the first 

in-first out basis. Additionally, TSA instituted weekly procedures to identify and 

highlight for action safety stock not in deployable condition.

OIG Analysis: TSA’s actions are partially responsive to the recommendation. 

Although the component provided actions to improve inventory deployment and 

management of safety stock, the comments did not fully address actions TSA will 

take to minimize the storage of unusable or obsolete equipment. The 

recommendation will remain open and unresolved until TSA provides additional 

information in response to the recommendation, and we review the 

implemented policy and procedures to ensure that they comprehensively 

address the identified concerns. 

Response to Recommendation #2: TSA partially concurs. TSA understands the 

need to reassess warehouse space requirements annually and will implement 

that portion of the recommendation. However, TSA identified constraints where 

adjusting leased warehouse space on an annual basis may be infeasible. 

www.oig.dhs.gov 13 OIG-13-82
 
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

OIG Analysis: TSA’s planned actions sufficiently address the recommendation. 

We recognize TSA should honor contractual commitments for agreed-upon 

periods. With the implementation of annual warehouse space assessments, TSA 

should be able to better plan for short- and long-term warehousing needs. The 

recommendation will remain open and unresolved until we examine the 

approved policy and procedures for conducting annual assessments. 

www.oig.dhs.gov 14 OIG-13-82
 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objectives, Scope, and Methodology 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was 

established by the Homeland Security Act of 2002 (Public Law 107-296) by amendment 

to the Inspector General Act of 1978. This is one of a series of audit, inspection, and 

special reports prepared as part of our oversight responsibilities to promote economy, 

efficiency, and effectiveness within the Department. 

The objective of the audit was to determine whether TSA effectively managed the 

Logistics Center. We reviewed TSA property management policies, procedures, and 

other memorandums. We also reviewed contracts for leasing the warehouses and 

related support services. We interviewed TSA staff responsible for the management 

and operation of the Logistics Center. 

We examined the inventory records for equipment stored at the Logistics Center as of 

May 31, 2012. During our site visit, we performed inventory testing of screening 

equipment and reviewed selected contracts for purchase of equipment stored in the 

warehouse to confirm purchase price. We also analyzed records for the equipment 

disposed of between May 2010 and June 2012. 

We relied on computer-processed data provided by TSA staff to analyze the length of 

time equipment had remained at the warehouse. We validated the accuracy of the data 

by testing a randomly drawn statistical sample of screening equipment to verify correct 

type, serial number, and bar code for the selected equipment. We determined that the 

data was sufficiently reliable for the purpose of this report. 

We conducted this performance audit between May and December 2012 pursuant to 

the Inspector General Act of 1978, as amended, and 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 upon our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based upon our 

audit objectives. 

www.oig.dhs.gov 15 OIG-13-82
 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

 

Appendix B 

Management Comments to the Draft Report 

u.s, Dtpartment of Homdond Sel'llrity 

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Transportation 

MAR 2 9 2013 Security 

Administration 

INfORMATION 

MEMORANDUM FOR, Anne L Richards 

AssisTant Inspector General for Audits 

U.S. Department of Homeland Security 

FROM, J.W. Halinski gl 

lJeputy Admin"tIirator 

SUBJECL Draft Report: Transportation Security Administration Logistics 

Center-!'1l'(mlury Management - For Official Use Only (DIG 

Pruject No. 12-170-AUD-TSA) 

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

Agency response to the subject report. TSA recognizes its responsibility for effective 

management of Transportation Security Equipment eTSE). We appreciate that the report 

acknowledged improved accowuability at the TSA Logistics Center (TLC) and are grateful for 

the uPJXlrlunity to review and provide comments to your draft report. 

Background 

TSA is charged \Vith countering terrorist threats to a\r1ation security with technologies and 

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

development, acquisition, and deployment ofTSE are central to TSA 's mission to protect {J.S. 

trnnsportation systems. TSA personnel usc equipment to screen air passengers, baggage, and 

cargo, including xMrays, explosives trace detection systems, explosives detection systems (EDS), 

bottled liquid scanners, and enhanced walk-through metal detectors. 

The TLC is a facility used to temporarily stage new and used screening equipment for 

deployment or redeployment to airports, and for processing surplus and obsolete equipment for 

disposal. TLC also stores non-screening equipment used at chee1.'-points and baggage screening 

operations, such as conveyors, tables, and stanchions. 

 

www.oig.dhs.gov 16 OIG-13-82
 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

 

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The Office of Inspector General (OIG) pcrfonncd this audit as a result of a May 2012 

Congressional hearing on TSA procurement, deployment, and storage of airport security-related 

equipment. The hearing discussed a report tiHed Airport insecurity TSA 's Failure 10 CostEffectively Procure, Deploy mJd Warehouse its Screening Technologies, It was issued by the 

joint majority staff from the House Committee on Oversight and Government Reform and the 

House Committee on Transportation and Infrastructure, The hearing also discussed a 

U.S. Department of Homeland Security (DHS) 010 report, Managemem o/Ihe Transportalion 

Security Administration's Logistics Center, issued in 2009. The three recommendations from 

that report have been closed. 

The 01G audit resllits fbund that TSA has improved accountability of screening equipment at ihe 

TLC since 2009 and noted that plans and procedlrres need additional improvements. 

Specifically, TSA stored unusable or obsolete equipment, maintained inappropriate safety stock 

levels, and did not develop an inventory management process that systematically deploys 

screening equipment. As a result, OIG claims TSA may be losing mility of equipment as it ages 

and annually funding approximately $800,000 ofU!U1ccded warehouse space. 

Discussion 

Overall, TSA concurs with OlG's recommendations: however, we are providing clarification and 

comment on four sections within the report; Equipment in Storage, Safety Stock, inventory 

Deployment, and Unused Warehouse Space. 

Referring to the Equipment in Storage section of the report, specifically to the Auto EDS 

equipment, in September 2012, TSA fonnaHy discontinued the Auto EDS technology program, 

and all pilot units were removed from airports. TSA is now coordinaling the transfer Hnd dblposal 

of this equipment from the warehouse. TSA notes that the Auto EDS project was unique to 

standard checked baggage EDS procurement, and the extended duration of these EDS units in 

the TSA warehouse is not representative of the majority ofEDS units. 

The report a1so states that TSA's warehouse inventory included obsolete items and cited Threat 

Image Projection Ready X-Rays (TR."X). It is true that all TRX will eventually be replaced by 

AT or AT·2 lmits. Until such time though, TSA must retain stocks ofTRX in case a replacement 

unit is needed for an airport 110t yet scheduled for AT or AT ~2 deployment. Since the 

deployment of AT-2 equipment requires training Transportation Security Officers (TSO) on the 

new technology, it is not feasible to deploy a single AT-2 machine to replace a failed TRX at an 

airpon where TSOs are all trained on TRX. For this reason, TRX safety stock is maintained at 

the warehouse. 

In the Safety Stock section, the folIowing change is suggested for the third sentence: ",. ,against 

uncertainties such as equipment failure, emerging requirements such as new airport tenninals, or 

special events (e.g. Super Dowl temporary screening)". TSA does not hold safety stock for 

"supplier shortages." 

The Sajin)! Stock section identified equipment designated as safety stock that was assigned a 

property condition code indicating it was 110t ready for deployment. TSA agrees that this is an 

 

www.oig.dhs.gov 17 OIG-13-82
 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

 

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area for improvement and, as a result, has instituted a weekly report to identify and highlight for 

appropriate action all safety stock nor in deployable condition. 

Table 7 identified checkpoint technology with a shortage of safciy stock that could hinder TSA' s 

ability to respond to critical failures by not baving equipment available. Table 7 included some 

ofTSA's newest technologies (e.g. L3 Advanced Imaging Technology (AIT), 500DT Expl,Qsives 

Trace Detection (EID) unils), a<; well as legacy equipment such as Itemiser U ETDs. TSA's 

deployment strategy for new technologies is to get these improved capabilities to airports first 

and backfill safety stocks afterward. Given that all airports scheduled to receive these 

technologies have not yet been completed, it is appropriate at this time for safety stock to be 

below the designated level. Also, since all legacy equipment procurements are complete and no 

more are planned, TSA's options are limited for filling legacy safety stock shortfalls. An 

initiative underway to rCMverify airport ETD requiremcnts is expected to identify some quantities 

of legacy units that are excess and may be used to filt warehouse safety stock levels. 

In the section on Inventory Deployment, the report states that TSA did not use a systematic 

inventory method for deploying screening equipment from the warehouse. TSA agrees this is an 

area for improvement. As a result, TSA incorporated an inventory policy into thc Security 

Equipment ,'\.ianagement Manual (SEMM) approved February 13, 20l3, which defines the 

factors, in priority order, for detennining which inventory is issued. First In First Out (FIFO) 

will be used for issuing inventory of a specifIc tc<::hnology, model, and configuration needed to 

fulfill airport screening requirements. The following cbange to the second sentence of the 

Inventory Deployment section is recommended: "Instead, the agenc)' requests inventory from the 

Logistics Center by serial number." Requests come from the Headquarters Program 

Management Office (PMO) instead of field users. 

In the section on Unused Warehouse Space, the report states that TSA was not using about 16 

percent of warehouse tloor space in April 2012, citing a TSA report of space usagc. The OIG 

concludes that TSA was, "paying for unused spaee that equates to an area larger than a football 

field." The OIG report did not recognize that warehouse operations are dynamic and space 

requirements temporaliiy rise and fall based on the pace of shipping and receiving operations. 

For instance. a TSA report of warehouse space usage dated February 2011 shows only 1 percent 

of floor space was unused at that time, Further, Exhibit 2 shows a misleading photograph of 

unused floor space in warehouse #2. TSA was intentionally reducing the amount of equipment 

stored in this warehnuse because the lease was lapsing in January 2013. TSA would like to 

claritY the statement in the report that "the agency used tbe empty floor space as a training area 

for its canine handlers." On one occasion~ TSA did allow canine handlers to use the warehouse 

for a brief training exercise. The purpose for Warehouse #2 was storage of screening eqUipment, 

not canine training. 

The section on Inventory Policies and Procedures states that the Security Equipment 

Management Manual (SEMM) "does not address the inventory method the contractnr should use 

to select the requested equipment." Section 7.3 ,2 of the SEM~1 docs define the factors, in 

priority order, used by TSA Headquarters for determining which inventory to issue first. Once a 

technology type, model. and configuration are identified to fulfill an aillJOrt's screening needs, a 

FIFO inventory policy is followed. 

 

www.oig.dhs.gov 18 OIG-13-82
 
 

 

 

4 

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

inventory management and warehouse usc at the TLC. We concur with your recommendations 

and have already ta..l(en steps to address them. 

Recommendation 1: Implement detailed inventory management procedun!s for equipment 

at the Transportation Security Administration's Logistics Center. 

TSA Concurs: TSA has adopted and implemented an inventory managementJX)licy to issue 

equipment on the basis of First In first Out (FIFO). In addition, a new weekly procedure has 

been instituted to identitY and highlight for appropriate action all safety stock not in deployable 

condition to ensure TSA's ability to respond quickly to critical deployment requirements. 

Recommendation 2: Develop and implement pro£edures to assess and adjust warehouse 

spaee on an annual basis. 

TSA Partially Concurs: The current warehouse leases expire on September 30, 2014, and 

planning for the next lease began in Marc-h 2013 (the TSA Office ofField Real Estate Services 

[FRES] requires 12-18 months for new leases or renewals), Space requirements for the followon lease will be based on the best available projections of equipment safety stock levels, 

deployments, and equipment life cycle replacement activity. TSA plans to lease onc warehouse 

with the capacity to satisfy storage requirements (versus two warehouses currently) to reduce 

labor costs for warehouse personnel and facility-related costs such as security system 

installation. 

TSA understands the need to reassess warehouse spacc requirements and will do so on an annual 

basis. There are considerations, however, that may make adjusting warehouse space annually 

infeasible. First of all, lease costs per square foot often vary depending on the length of the lease 

period. Generally, shmtcr leases cost more. While short lease periods provide more flexibility 

for adjusting space requirements, the cost savings associated with a longer lease may provide 

better value to the Government. TSA property personnel will work closely with agency real 

estate professionals to determine the optimum lease period that best balances cost versus 

flexibility provided no significant changes in space requirements are forecast for the proposed 

lease period. Once a lease is signed, TSA will honor its contractual commitment tor the stated 

period. 

As stated previously, the pace of shipping and receiving operations may cause temporary 

fluctuations in storage requirements. Unless unforeseen events cause significant and lasting 

reductions in the warehouse space requirement forecast, it is not practical to modify leases to 

accommodate temporary space reductions. TSA's annual assessment of warehouse space 

requirements ""ill inform Agency management officials whether adjustments are warranted, so 

appropriate action may be taken. 

OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

 

www.oig.dhs.gov 19 OIG-13-82
 
 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix C 

Warehouse Inventory Aging

Logistics Center Inventory as of May 31, 2012

Condition 

Code

1 – New

New 

Subtotal

4 – Used 

Used 

Subtotal

7 – Needs 

Repair 

Needs 

Repair 

Subtotal

On-Hold 

X – Pending 

Disposal 

Pending 

Disposal 

Subtotal

Total

Category 

TSE 

PER 

FFE 

TSE 

PER 

FFE 

TSE 

PER 

FFE 

TSE 

TSE 

non-TSE 

S 1 year

479

197

3,184

3,860

61

130

1,325

1,516

611

7

782

1,400

49

925

1,776

2,701

9,526

>1 year and 

< 2 years 

218

91

1,485

1,794

88

19

809

916

233

0

67

300

16

38

590

628 

3,654

� 2 years

4

107

3,127

3,238 

40

25

101

166

56

0

2

58

2

9

351

360

3,824

Quantity

701

395

7,796

8,892

189

174

2,235

2,598

900

7 

851

1,758

67

972

2,717 

3,689

17,004

Dollar Value

Recorded 

$61,076,693

4,215,363

3,557,546

$68,849,602

28,950,015

2,294,611

$429,771

$31,674,397

28,542,536

77,280

535,871

$29,155,687

$1,232,864

50,725,044

4,040,160

$54,765,204

$185,677,754

Source: DHS OIG analysis of TSA data.
 

www.oig.dhs.gov 20 OIG-13-82
 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix D 

Major Contributors to This Report 

Linda Howard, Director 

Christine Haynes, Audit Manager

Tiffany Bellinger, Auditor 

Karen Gardner, Auditor 

David Lu, Program Analyst 

Tessa May-Fraser, Program Analyst 

Matthew Noll, Program Analyst 

Kevin Donahue, Independent Referencer 

Kevin Dolloson, Communications Analyst 

www.oig.dhs.gov 21 OIG-13-82
 
 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix E 

Report Distribution 

Department of Homeland Security

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff

General Counsel 

Executive Secretary 

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 

Acting Chief Privacy Officer 

Transportation Security Administration

Administrator 

TSA Audit Liaison 

Office of Management and Budget

Chief, Homeland Security Branch 

DHS OIG Budget Examiner

Congress

Congressional Oversight and Appropriations Committees, as appropriate 

www.oig.dhs.gov 22 OIG-13-82
 
 

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