Department of Homeland Security
 

Review of Costs Invoiced by the City of San 

Antonio Relating to the San Antonio International 

Airport Terminal B Checked Baggage Screening 

Project Under Other Transaction Agreement 

Number HSTS04-09-H-REC168 Awarded by the 

Transportation Security Administration 

American Recovery and Reinvestment Act of 2009 

OIG-12-44 March 2012
 
Office of III!;pcctor Gel/eraf 

U.S. Department of Homela nd S«urily 

Washington. OC 20528 

Homeland 

Security 

MAR 5 - 2012 

MEMORANDUM FOR: Robi n Kane 

Assistant AdministratorlChiefTechnology Officer 

Office of Operational Process and Technology 

Transportation Security Administration 

FROM: 

Assistant 

Anne L. R

In

icha

specto

rds 

r 

~)I 

General 

~ 

for Audits 

SUBJECT: Review o/Costs Invoiced by the City o/San Antonio 

Relating to the San Antonio International Airport Terminal 

B Checked Baggage Screening Project Under Other 

Transaction Agreement Number HSTS04-09-H-REC168 

Awarded by the Transportation Security Administration 

Attached for your infonnation is our final letter report, Review a/Costs Invoiced by the 

City o/San Antonio Relating to the San Antonio International Airport Terminal B 

Checked Baggage Screening Project UI/der Other Transactioll Agreement Number 

HSTS04-09-H-RECI68 Awarded by the Transportation Security Administration. Since 

the report contains no recommendations to Transportation Security Administration 

management, we did not solicit fonnal comment. 

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

copies of our report to appropri ate congressional committees with oversight and 

appropriation responsibil ity over the Department of Homeland Security. We will post the 

report on our website for public dissemination. 

Should you have any questions, please cal l me, or your staff may contact 

John E. McCoy II, Deputy Assistant Inspector General for Audits, at (202) 254-4100. 

Attachment 
Background 

On February 17, 2009, Congress enacted the American Recovery and Reinvestment Act of 

2009 (Recovery Act), as amended, to preserve and create jobs, promote economic 

recovery, and invest in transportation, environmental protection, and other infrastructure 

that will provide long-term economic benefits. The Recovery Act appropriated $1 billion 

to the Transportation Security Administration (TSA) for “procurement and installation of 

checked baggage explosives detection systems and checkpoint explosives detection 

equipment....” According to TSA, $574,023,483 of that amount was awarded to 25 

airport organizations for 29 projects modifying airports to accommodate new baggagescreening equipment. 

Under Other Transaction Agreement (OTA) No. HSTS04-09-H-REC168, TSA agreed to 

reimburse the City of San Antonio (the City) for allowable, allocable, and reasonable 

costs to support installation of a Checked Baggage Inspection System (CBIS) at the San 

Antonio International Airport Terminal. The OTA cost ceiling was $14,385,466 and 

covered 90% of project design, management, and construction for the CBIS portion of 

the airport’s overall baggage handling system. 

The OTA was signed on September 28, 2009; specifies a project period from May 1, 

2009, through September 30, 2011; and requires the City to submit invoices for 

reimbursement of project costs to TSA. Reimbursement for eligible project costs is based 

on the scope of the agreement; Office of Management and Budget (OMB) Circular A-87, 

Cost Principles for State, Local and Indian Tribal Governments; and the TSA publication 

Reimbursable and Non-Reimbursable Costs for the Electronic Baggage Screening 

Program, version 1.0, June 2008. As of July 2011, the City invoiced costs of $8,994,816 

for installation of the CBIS. The costs invoiced by the City represent 90% of the costs 

incurred. 

The agreement also requires the City to comply with OMB Circular A-133, Audits of 

States, Local Governments, and Nonprofit Organizations, and Recovery Act provisions 

to submit quarterly recipient reports to the federal government; pay prevailing wages as 

determined by the Secretary of Labor; and use American1

 iron, steel, and manufactured 

goods. 

The objective of this audit was to determine whether costs invoiced by the City are 

allowable, allocable, and reasonable according to the funding agreement and applicable 

federal requirements. 

1

 The Department of Homeland Security (DHS) granted a limited, nationwide public interest waiver of the 

“buy American” requirements for each TSA Electronic Baggage Screening Program project. The waiver 

specifies that at least 95% of the costs of each project will comply with the buy American requirements of 

section 1605 of the Recovery Act, and allows up to 5% of total project costs to be used for non-American 

products. 

Page 2 
Results of Review 

We determined that that the City incurred and invoiced sufficient allowable, allocable, 

and reasonable costs, as of July 2011, to earn the OTA agreed-upon share, as follows: 

Description Invoiced Cost 

Construction, Design, and Management $9,994,240 

TSA Share 90%

 Total TSA Share $8,994,816 

In addition, we verified that the City submitted the required quarterly reports on project 

activities to the federal government. We also determined that the City complied with the 

OTA requirements for paying prevailing wages and using American iron, steel, and 

manufactured goods in the construction of the project. 

Page 3 
Appendix A 

Purpose, Scope, and Methodology 

The objective of this audit was to determine whether costs invoiced 

by the City are allowable, allocable, and reasonable according to 

the funding agreement and applicable federal requirements. Our 

audit covered invoiced costs of $8,994,816 for the period May 1, 

2009, through July 21, 2011. 

Our tests and procedures included the following: 

•	 Reviewing TSA project files, the OTA and modifications, 

the Recovery Act, and TSA and OMB guidelines; 

•	 Interviewing TSA officials to get an understanding of the 

project and project management; 

•	 Examining the City’s accounting records supporting 


amounts invoiced; 


•	 Interviewing City officials to obtain an understanding of 

project management, accounting, procurement, and 

invoicing; 

•	 Inspecting the CBIS project; and 

•	 Reviewing the audit working papers of the certified public 

accounting firm that performed the Single Audit of the City 

for the fiscal year ending September 30, 2010. 

The Single Audit of the City was performed by Grant Thornton 

and included Recovery Act-funded CBIS project costs totaling 

$6,986,912 for fiscal year 2010 (about 78% of invoiced costs). 

The Single Audit report classified the CBIS as a major program. 

The Single Audit report did not identify any questionable costs 

related to the CBIS or any deficiencies in internal controls that 

were identified as material weaknesses that would affect the CBIS. 

We also tested City records supporting costs invoiced to determine 

compliance with OMB Circular A-87 and with other terms and 

conditions of the agreement. We considered City internal controls 

over the administration of TSA funds in determining our audit 

procedures. 

We conducted this performance review between August 2 and 

January 20, 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. 

Page 4 
Appendix A 

Purpose, Scope, and Methodology 

Our audit was conducted without the benefit of a technical 

evaluation by TSA; therefore, our conclusions are qualified to the 

extent that a technical evaluation may affect the allowability of 

invoiced costs. However, we coordinated our review with 

appropriate contracting officials. 

We appreciate the cooperation of the City and TSA officials in 

providing the information and access necessary to accomplish this 

review. 

Page 5 
Appendix B 

Major Contributors to this Report 

Roger LaRouche, Director 

Karl Gallagher, Audit Manager 

Garrick Greer, Auditor 

Ralleisha Dean, Report Referencer 

Page 6 
 

Appendix C 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

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 

Departmental Recovery Act Coordinator 

Acting General Manager, Checked Baggage Division/Program 

Manager, Electronic Baggage Screening Program, TSA 

Audit Liaison Official, TSA 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

Page 7 
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 e-mail your request to 

our OIG Office of Public Affairs at DHS-OIG.OfficePublicAffairs@dhs.gov. For 

additional information, visit our OIG website at www.oig.dhs.gov or follow us on Twitter 

@dhsoig. 

OIG HOTLINE 

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

or noncriminal misconduct relative to Department of Homeland Security programs and 

operations: 

• Call our Hotline at 1-800-323-8603 

 

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DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigation - Hotline, 

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