Office of Inspector General 

DEPARTMENT OF HOMELAND SECURITY 

Irregularities in the Development of the 

Transportation Security Operations Center 

OIG-05-18 March 2005

Office of Inspections and Special Reviews 
Office of Inspector General 

U.S. Department of Homeland Security

Washington, DC 20528

Preface 

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 by the OIG as 

part of its DHS oversight responsibilities to promote economy, effectiveness, and efficiency within 

the department. 

This report addresses the management controls and procurement procedures used during the 

development of the Transportation Security Operations Center. It is based on interviews with 

Transportation Security Administration (TSA) employees and contractors involved in the project, as 

well as a review of applicable documents. 

The recommendations herein have been developed to the best knowledge available to the OIG, and 

have been discussed in draft with those responsible for implementation. It is our hope that this report 

will result in more effective, efficient, and economical operations. We express our appreciation to all 

of those who contributed to the preparation of this report. 

Richard L. Skinner 

Acting Inspector General 
Contents 

Introduction........................................................................................................................................... 3 

Results in Brief ..................................................................................................................................... 4 

Background........................................................................................................................................... 8 

Purpose, Scope, and Methodology...................................................................................................... 10 

Findings .............................................................................................................................................. 11 

Management Controls................................................................................................................... 11 

Acquisition of Art, Plants, and Miscellaneous Office Supplies.................................................... 19 

Use of Purchase Cards.................................................................................................................. 21 

Questions of Impartiality .............................................................................................................. 26 

Facility Enhancements.................................................................................................................. 27 

 

Recommendations......................................................................................................................... 32 

Appendices 

Appendix A: Management Comments...................................................................................... 33 

Appendix B: OIG Evaluation of Management Comments........................................................57 

Appendix C: Recommendations............................................................................................... 61 

Appendix D: Major Contributors to this Report ....................................................................... 62 

Appendix E: Report Distribution.............................................................................................. 63 

Irregularities in the Development of the Transportation Security Operations Center Page 1 
Contents 

Abbreviations 

AMS Acquisition Management System

ATSA Aviation and Transportation Security Act 

CAPPS II Computer Assisted Passenger Pre-screening System, Second Generation 

CFR Code of Federal Regulations 

CMO Crisis Management Operations 

DHS Department of Homeland Security 

FAA Federal Aviation Administration 

FAMS Federal Air Marshal Service 

FPS Federal Protective Service 

GAO Government Accountability Office 

GSA General Services Administration 

OIAPR Office of Internal Affairs and Program Review 

OIG Office of Inspector General 

PCPM Purchase Card Program Manager 

P-card Purchase Card 

SOCD Systems Operations Control Division

TSA Transportation Security Administration 

 TSOC Transportation Security Operations Center 

 USC United States Code 

 

Irregularities in the Development of the Transportation Security Operations Center Page 2 
OIG 

Department of Homeland Security 

Office of Inspector General

Irregularities in the Development of the Transportation Security Operations Center Page 3 

 

Introduction 

In response to the September 11, 2001, terrorist attacks in the United States 

and to defend against potential future attacks, Congress enacted the Aviation 

and Transportation Security Act (ATSA),1

 which established TSA. In 

February 2002, TSA officially assumed responsibility for civil aviation 

security functions. One step that TSA took to fulfill its mission was to create a 

crisis management operations (CMO) directorate to prevent and respond to 

threats against all modes of transportation. TSA assigned a CMO employee to 

manage the project of locating a building, securing the lease, and developing 

the space to house the CMO. The project manager located a space to share 

with the Federal Air Marshal Service (FAMS), which sought a location for its 

Systems Operations Control Division (SOCD). In February 2003, TSA leased 

an undeveloped office building to house both the CMO and the SOCD. At the 

time, the building was simply a shell without interior walls, floors, ceilings, 

electrical wiring, furniture, or equipment. 

The project to develop and outfit the building was completed in July 2003.2

The building has 55 offices, more than 150 workstations, two watch floors, 

twelve conference rooms, seven kitchens, and a fitness center. The CMO’s 

space, which is known as the Transportation Security Operations Center 

(TSOC), 3 has 30 TSA employees and approximately 29 contract employees. 

The SOCD has 49 employees and approximately 28 contract employees. 

 

In November 2003, TSA’s office of internal affairs and program review 

(OIAPR) began a review of suspicious purchases that were made during the 

development of the building. OIAPR uncovered improper use of purchase 

cards (P-card); a $500,000 expenditure for artwork, silk plants, and 

miscellaneous supplies; and, unethical and possibly illegal activities by TSOC 

employees. In May 2004, OIAPR reported its findings to us for further 

review. 

1

 Public Law No. 107-71. 

2

 The “project” as used in this report includes planning, leasing, constructing, and equipping the building that houses the 

SOCD and the CMO. 

3

 In its conceptual stage, the operations center was originally called the Transportation Security Coordination Center. 
Irregularities in the Development of the Transportation Security Operations Center Page 4 

The scope of our review included: 

• An examination of the construction and purchases funded through the 

facility lease. 

• The P-card purchases of equipment and supplies for the building. 

• The management and procurement processes that supported the 

building’s acquisition, construction, and outfitting. 

• The adequacy of TSA’s management controls to ensure that purchases 

were made according to applicable procurement rules and regulations. 

Results in Brief 

Management Controls

Breakdowns in management controls left the project vulnerable to waste and 

abuse.4 The waste and abuse reported here is attributable to wasteful or 

inappropriate decision-making by individuals who operated with unchecked 

autonomy that resulted from the determination to complete the project within 

90 days. This was a self-imposed deadline. Senior managers, concerned about 

delaying completion, overrode protests by subordinates, which allowed the 

project manager to circumvent those rules and regulations. 

The acquisition policy that governs TSA encourages management to involve 

procurement personnel early in the acquisition process.5

 Despite that policy, 

the project manager, the chief operating officer, and the deputy administrator, 

did not involve TSA’s procurement division in the initial phases of the TSOC 

project. Procurement managers6

 were not included in developing requirements 

to define the TSOC’s needs,7

 selecting a contract vehicle, selecting a site, or 

planning office space allotment, in violation of TSA’s acquisition policy. 

When we asked for supporting documentation normally required during the 

planning stages of an acquisition, one TSA employee said that such 

 

4 The General Accounting Office (GAO) Standards for Internal Control in the Federal Government, GAO/AIMD-00-

21.3.1 (Washington, D.C., November 1999) discusses management’s key role in demonstrating and maintaining an 

organization’s integrity and ethical values, especially in setting and maintaining the organization’s ethical tone, 

providing guidance for proper behavior, and removing temptations for unethical behavior. 

5

 TSA follows the Federal Aviation Administration’s Acquisition Management System policy to acquire or procure 

goods, services, and real estate. 

6

 As used in this report, TSA procurement managers include personnel from TSA’s real estate services office, the office 

of acquisition, the chief administrative officer, and the chief systems support officer. 7

 The requirements would have defined the scope of the project and the tenant improvements or reimbursables associated 

with the project. They would be used for guidance in selecting and developing a site, and forming a budget and a 

schedule for completing the project. 
Irregularities in the Development of the Transportation Security Operations Center Page 5 

documentation had not been developed; others said they were unable to locate 

the paperwork. For example, though requested, TSA did not produce 

paperwork that documented the process or justified the project’s $19 million 

budget. The omission of such paperwork contravenes TSA’s acquisition 

policy, which is set forth in the Acquisition Management System (AMS). The 

AMS requires documentation that explains and justifies procurements and 

business decisions.8

Efforts of procurement managers to exercise control and oversight were 

quashed by the deputy administrator and the chief operating officer. When 

procurement managers notified senior managers that the project manager was 

violating procurement policies, the deputy administrator and chief operating 

officer admonished them to support the project manager. Out of concern that 

they remained responsible for the project’s integrity, but could not enforce 

procedures to control it, procurement managers sought to shift responsibility 

for procurement oversight to a project oversight board. The deputy 

administrator approved the board and its charter, which included the 

responsibility to ensure that project activities were conducted within 

applicable procurement regulations and policies. The board first convened in 

April 2003 and met regularly throughout the construction of the building. 

Despite its charter, the board did not provide control and oversight to ensure 

adherence to applicable procurement regulations and policy. 

With the oversight board in place and under the deputy administrator’s 

direction to support the project manager, the director of acquisitions 

negotiated what was called a “hybrid” contracting officer authority with the 

project manager in April 2003. Under the hybrid arrangement, the real estate 

contracting officer maintained the authority to ensure competition for 

purchases, but abandoned the responsibility to review invoices that the project 

manager submitted, signing each without validating the expenses. To 

accelerate processing, the real estate contracting officer would sign all forms 

submitted to him within hours; if he were unavailable, the director of 

acquisitions would sign for him. There was no policy or regulation granting 

TSA the authority to create hybrid contracting officer authority. Additionally, 

the project manager did not have contracting officer or contracting officer’s 

technical representative (COTR) training. 

Senior management’s failure to enforce procurement regulations and policy, 

as well as the procurement managers’ acquiescence to senior management’s 

pressure, created a culture in which procurement procedures were abandoned, 

ethical norms slipped, and fiscal responsibility was neglected. This 

environment fostered improper or questionable purchases and construction 

 

8

 AMS § 5.3.10. 
Irregularities in the Development of the Transportation Security Operations Center Page 6 

decisions, as well as disregard for the ethical duty of impartiality, by the 

project manager and others involved with the project. 

Improper Purchases

The project manager and the facility operating officer improperly purchased 

decorative and miscellaneous items totaling $500,000, most of which was 

spent on furnishing the facility with art and silk plants. They charged the 

purchase to the construction contract and kept it hidden from the real estate 

contracting officer responsible for that contract. Representatives from the 

vendor, a tool company who supplied the art and silk flowers, said that when 

the tool company submitted a single invoice describing the goods as 

“enhancements,” the facility operations officer ordered the company to retract 

the invoice and reissue the amount in three separate invoices with a single 

descriptive line, “equipment and tools,” thus concealing the true nature of the 

charges. The tool company had to “manually construct” the invoices because 

its accounting system could not modify invoices once they had been issued. 

From the three invoices, $252,392 was attributable to the purchase of artwork; 

$29,032 to an art consultant and an assistant; $30,085 to the purchase of silk 

plants; and, $13,861 to the acquisition of lamps and miscellaneous equipment. 

The vendor added a 20% markup of $65,074 and a credit for future purchases 

of $26,243. In addition to these charges, the vendor received $83,313 in 

overpayments because the facility operations officer insisted that the vendor 

submit an invoice before final costs had been determined. The facility 

operations officer never reconciled the final costs against the estimate or 

attempted to recoup the over payment. 

The project manager, facility operations officer, and a TSOC employee 

routinely violated TSA purchase card (P-card) policies. In contravention of 

P-card policy, they purchased furniture and personal items, such as loveseats, 

armoires, leather briefcases, and coffee pots. They discussed with the vendor 

ways to circumvent the rule that forbids purchases exceeding a $2,500 limit 

and that bans “split transactions,” a method for concealing purchases over 

$2,500 by splitting them into several credit card transactions. The P-cards 

were used in ten purchases that ranged in value from $3,350 to $47,449. This 

required 58 separate credit card transactions to complete. Also, the 

P-card holders failed to maintain logs recording all transactions as required by 

federal P-card regulations. Last, the project manager, the approving official 

for the P-card holders, failed to monitor purchases as required by TSA policy. 

Fiduciary Violations

The company from whom the facility operations officer purchased the art, silk 

plants, and miscellaneous items, as well as to whom he directed the majority 

of P-card purchases, was a tool company that had never sold such 
Irregularities in the Development of the Transportation Security Operations Center Page 7 

merchandise. The facility operations officer had a prior business and personal 

relationship with the tool company and its owners. Within weeks of his 

resignation from TSA, the facility operations officer started a new business 

with the tool company’s owners. He became an officer and employee of the 

new company, receiving a salary increase of approximately $34,000 as well as 

stock shares.

Federal and TSA ethical guidelines require employees to be impartial in their 

dealings with other entities, not use their position for private gain, and avoid 

the appearance of ethical violations. 9 The facility operations officer may have 

breached the requirement to avoid the appearance of ethical violations by 

directing purchases to the tool company with which he had a prior relationship 

and by later securing a position with the tool company’s owners at a 

significant increase in pay. He may have violated the requirements mandating 

impartiality and prohibiting use of a position for private gain, too. 

Facility Enhancements

The project manager made procurement and construction decisions that 

appear wasteful. For example, the project manager designed offices and 

workstations that were larger than TSA or federal standards permit; provided 

television monitors with commercial cable service in 45 of 55 offices; 

equipped seven kitchens with numerous kitchen appliances, such as 

refrigerators, microwave ovens, icemakers, and dishwashers; and developed a 

4,200 square-foot fitness center with a towel laundry service for the 79 federal 

employees located there. There was no documented justification or 

cost/benefit analysis supporting these expenditures. The real estate contracting 

officer objected to some of the amenities but was overridden by the project 

manager. 

Recommendations

Our recommendations emphasize the need for TSA to adhere to disciplined 

decision-making processes to ensure that projects are implemented at 

acceptable costs and that procurement practices are consistent with statutes, 

regulations, and rules. To improve its management controls and program 

oversight, we are recommending that TSA: 

Recommendation 1: Follow its own policy as well as applicable federal 

regulations when acquiring real estate and procuring goods and services. 

 

9

 Key rules for federal employee conduct are contained in Standards of Ethical Conduct for Employees in the Executive 

Branch, 5 C.F.R. § 2635, and more particularly, Financial Conflicts of Interests, 5 C.F.R. § 2635 part D. 
Irregularities in the Development of the Transportation Security Operations Center Page 8 

Recommendation 2: Ensure that all contracting officers and contracting 

officers’ technical representatives receive training appropriate for those 

positions. 

Recommendation 3: Recover the $83,313 overpayment to the tool company 

and such other sums for which TSA may have a legal remedy. 

Background 

In June 2002, TSA established the Aviation Operations, CMO. Since TSA did 

not have an operations center, the CMO team worked out of space borrowed 

from the Federal Aviation Administration (FAA) headquarters’ operations 

center, relying on cellular phones and laptop computers to conduct their work. 

CMO managers were concerned that inadequate space and technical support 

would hamper its ability to achieve command and control over aviation 

security incidents. TSA determined that the CMO needed its own operations 

center and supporting resources. As a result, TSA senior leadership 

developed the TSOC concept and adopted an accelerated project completion 

timeline of 90 days for completing construction. TSA named one of the CMO 

managers as the project manager for the effort. Although his supervisor was 

the CMO director, the project manager reported directly to the deputy 

administrator and chief operating officer on TSOC project matters. The 

project manager began searching for a site in the fall of 2002.10 

Coincidentally, as the CMO was looking for suitable space for its operations 

center in the autumn of 2002, FAMS, which at that time was a component of 

the FAA, identified a relocation facility for its SOCD. The facility’s drawback 

was that it had 110,000 square feet, more space than FAMS needed. FAMS 

also had security concerns about sharing the facility with a non-government 

entity. In November 2002, FAMS was transferred to TSA. It is unclear when 

the project manager became aware of FAMS’ relocation plans, but by 

December 2002, TSA had decided to co-locate the TSOC at the facility 

chosen by FAMS for its SOCD operations.11 The CMO project manager 

became the manager for developing the facility for both the TSOC and the 

SOCD. 

At the time, the facility was an empty shell, requiring construction of interior 

walls, floors, ceilings, and electrical wiring. From December 2002 through the 

spring of 2003, the project manager worked with the proposed construction 

 

10 We could not establish the dates of the initial planning activities, such as conducting a survey, advertising the need, or 

reviewing specific sites, or whether those routine acquisition activities were actually conducted, because documentation 

of those efforts was not maintained. 

11 The first space plans for the facility detailing the layout for the CMO and the FAMS SOCD were completed on 

December 12, 2002. 
Irregularities in the Development of the Transportation Security Operations Center Page 9 

management company and FAMS representatives to design the floor space 

plan and to discuss cost estimates for the TSOC and SOCD. Because the 

TSOC and SOCD together did not require the full 110,000 feet of space, TSA 

solicited other federal agencies and programs to consider sharing the facility. 

TSA considered co-locating its Computer Assisted Passenger Prescreening 

System (CAPPS II) program to the facility, but eventually decided not to do 

so. DHS officials discussed co-locating the department’s operations center at 

the facility, too. However, due to concerns about the facility’s physical 

security, DHS withdrew its consideration.12 TSA developed the facility for 

only the TSOC and SOCD, leaving approximately 13,500 square feet 

undeveloped. 

TSA signed the lease for the facility in February 2003 to accommodate 

FAMS’ SOCD and the TSOC. In addition to obligating the government to the 

rental rate, the lease provided $5,404,947 in credits, which TSA could spend 

on developing the building’s interior and pay back on an amortized basis over 

the life of the lease. A March 26, 2003, modification to the lease adjusted the 

total amount of credit down by $90,047, bringing the total in available credit 

to $5,314,900. TSA planned to use the credits, as well as an additional 

$7,247,630, to complete the construction through a management company. An 

additional $11,052,370 was budgeted for purchasing furniture, establishing 

information technology functionality, and providing contractual program 

management support. The project budget was finalized in May 2003, with 

total project funding of $23,614,900, which included the lessor’s credits of 

$5,314,900 and a TSA direct contribution of $18,300,000.13 Construction 

began in April 2003, and the facility was completed, but for minor repairs, in 

97 days. It opened in July 2003. 

Thirty TSOC and 49 FAMS federal employees, as well as approximately 57 

contract employees, were stationed in the facility. Together, the TSOC and 

SOCD included 55 offices, more than 150 workstations, two watch floors, 12 

conference rooms, seven kitchens, and a fitness center. 

In September 2003, after the TSOC/SOCD became operational, TSA issued Pcards to the facility operations officer and another employee to purchase 

office supplies. In the same month, TSA’s purchase card program manager 

(PCPM) began to notice anomalies in the P-card transactions.14 The PCPM 

notified the approving official and P-card holders of the problems and offered 

to conduct additional training on proper P-card procedures and policy. In 

 

12 Funding for security upgrades was not provided initially. However, prior to the completion of this report, DHS Office 

of Security installed a complete security package at the TSOC to the Level IV standard. 

13 The $23,614,900 funded development of FAMS’ SOCD and the TSOC. The project’s budget was finalized 

approximately one month after project construction began. 

14 The P-card holders were attempting to use the cards with merchants that were prohibited by TSA P-card policy, but 

were blocked from completing the transactions. 
Irregularities in the Development of the Transportation Security Operations Center Page 10 

November 2003, the PCPM conducted a review of unusual P-card transactions 

made by TSOC personnel. The PCPM flagged several transactions as possible 

split purchases and referred the P-card account to TSA’s OIAPR for 

investigation. The OIAPR investigation not only documented numerous 

instances of split purchase card activity and other irregular procurement 

practices, but uncovered an improper expenditure of $500,000 and possible 

unethical conduct by personnel involved in the project. OIAPR referred the 

case to our office for further review. 

In acquiring and developing the facility, TSA was governed by the FAA’s 

AMS. The project’s development also was subject to General Service 

Administration (GSA), Federal Property Management, and Federal Records 

Management rules and regulations, as well as Comptroller General decisions 

regarding application of those regulations. Those authorities provided a 

framework for guiding the acquisition process and for governing the 

suitability of purchases. 

Purpose, Scope, and Methodology 

The objectives of our review were to determine whether: 

• Adequate controls were established for the P-card holders. 

• Internal controls existed to govern the project’s procurement and 

payment processes. 

• Internal controls provided reasonable assurances that proper 

procurement regulations were followed. 

We interviewed more than 40 managers, program officials, and contractors 

who supported the project. The majority of our fieldwork was conducted at 

TSA headquarters. To gain a better understanding of the project, we toured the 

facility and conducted numerous on-site interviews with those involved in 

managing the construction of the project. We interviewed the design 

consultant who was hired by the vendor to purchase and install the facility’s 

artwork, and the vendor, by proxy,15 who was involved in the questionable 

purchase activities. 

 

15 After the initial investigation by OIAPR, the vendor retained a law firm to represent its interests. Our site visit was 

coordinated with the vendor’s legal representatives and scheduled a month prior to our inspectors’ arrival at the vendor’s 

headquarters. Once our inspectors arrived at the vendor’s business, the vendor’s attorneys refused to allow us to 

interview the owners of the company or its employees. However, the owners and employees were permitted to provide 

information and documentation by proxy through the attorneys. 
Irregularities in the Development of the Transportation Security Operations Center Page 11 

We reviewed documentation pertinent to the project’s acquisition and 

procurement processes, including personnel records, emails, written 

correspondence, internal memoranda, procurement requests, construction 

change orders, notices to proceed, building space plans, construction blue 

prints, and budget sheets. We also reviewed federal regulations such as the 

Federal Acquisition Regulations, the AMS, the Federal Management 

Regulations, Comptroller General decisions, the Federal Records 

Management Act, the Government Accountability Office’s (GAO) Principles 

of Federal Appropriations Law (the “Redbook”), and TSA internal policy and 

directives related to acquiring and furnishing office space. 

 

We conducted our review between May 2004 and December 2004 under the 

authority of the Inspector General Act of 1978, as amended, and according to 

the Quality Standards for Inspections issued by the President’s Council on 

Integrity and Efficiency. 

Findings 

 

TSA’s deputy administrator and the project manager adopted an accelerated 

90-day deadline for completing the project.16 Although TSA’s need for an 

adequate operation center was critically important given the uncertainty of 

future terrorist events, TSA did not provide evidence that the decision to 

accelerate construction arose from a formal, disciplined analysis of 

requirements and scheduling priorities. Rather, the project manager consulted 

with the real estate owner’s construction management company and 

subcontractors to determine a project schedule. The resultant schedule 

allowed 150 days for completing the TSOC and SOCD with a provision for 

accelerating completion of the project to 90 days at additional cost to the 

government. This analysis was conducted primarily by the real estate 

owner’s construction contractors. Neither the TSA real estate office nor the 

contracting officer was included in the meetings between the project manager 

and construction contractors. They were not provided with a copy of the 

proposed schedule or given the opportunity to comment on it. 

The initial planning of the TSOC was marked by an absence of written plans 

or specifications.17 In addition to the omission of a justification for the 90-day 

deadline was the absence of a discussion of the cost or other consequences of 

an accelerated schedule. 

 

16 The construction management company was to provide “beneficial occupancy” within the 90-day deadline, which 

meant that the building was to be ready for occupancy by the end of that period. Minor repairs, or “punch list” tasks, 

could be finished after the deadline. 

17 We note that this was a time in which TSA also was completing the exceptionally difficult tasks for hiring, training, 

and deploying approximately 55,600 passenger and baggage screeners and baggage screening equipment to meet 

Congressionally imposed deadlines. 
Irregularities in the Development of the Transportation Security Operations Center Page 12 

Management Controls 

TSA’s office of acquisitions is responsible for administering contracts and 

awarding business agreements in support of the TSA mission. In addition, it 

serves as an advisor for developing acquisition strategies, and it establishes 

and enforces acquisition policies and processes. The office of acquisitions 

derives its authority from the FAA’s AMS, as well as other applicable federal 

regulations. 

Seven TSA employees and two private contractors who were involved in this 

project said that TSA disregarded procurement procedures in order to achieve 

the 90-day deadline. One interviewee said the project manager claimed that 

the deputy administrator told him, “I’ll give you the money, just do it,” and 

authorized the expenditure of funds despite the absence of available or 

budgeted funding.18 Another person said that TSA’s operations office had 

subjugated the acquisitions office with an attitude of “get it done - it doesn’t 

matter how!”19 Another person said, “The culture at TSA is that the mission 

supersedes the process.” With regard to the procurement managers’ efforts to 

impose routine procurement procedures, the same person said, “We tried but 

our hands were tied,” and “...Acquisitions had an impossible task. We had the 

responsibility, but not the authority to manage the project.” To complete the 

project within 90 days, the deputy administrator allowed the project manager 

to control the project, which often included preempting procurement 

procedures and overriding the authority of procurement managers. 

The AMS encourages agencies to involve real estate acquisition personnel 

early in the real estate acquisition planning process.20 Additionally, the AMS 

instructs contracting officers to be involved in reviewing requirements, 

developing administrative space standards, and determining the appropriate 

method of procurement.21 TSA’s real estate procurement managers were not 

invited to assist in the project until December 2002, after the procurement 

method had been determined, the site had been selected, and space planning 

was underway.22 The real estate contracting officer said, “the deal had already 

been cooked.” Requirements for the TSOC, such as financial limits23 and 

 

18 The Deputy Administrator said that he did not remember making that statement and doubted that he would have. 

19 The Deputy Administrator said that he told the procurement managers and the project manager to find ways to shorten 

the processes. He said that when a question arose regarding compliance, he always instructed his subordinates to obey 

the law. 

20 AMS § 5.3. 

21 AMS § 5.3.2. 

22 FAMS included its procurement managers in the initial SOCD planning until project management shifted to TSA. 

23 The only documentation that TSA produced that could justify the budget was a construction company’s cost estimate 

for developing the facility. However, the deputy administrator recalled a presentation to OMB in which the project 

funding was approved. Although he suggested a copy of that submission might have been kept at FAMS, we were unable 

to locate it in follow-up conversations with FAMS officials. 
Irregularities in the Development of the Transportation Security Operations Center Page 13 

infrastructure needs, were never developed, an omission that resulted in 

questionable facility enhancement decisions and purchases.24 None of the 

initial procedures for acquiring the TSOC, such as conducting site surveys or 

marketing the need for new space, was documented, in violation of the AMS 

policy that requires justification and explanation for business decisions and 

procurement actions.25 The real estate contracting officer never received the 

space plans or the construction schedules from which to monitor the project’s 

progress. 

Once the procurement managers joined the project, consternation arose when 

they attempted to follow routine procurement procedures. Accordingly, on 

February 6, 2003, the chief administrative officer convened a meeting with 

procurement managers, the project manager, and others to clarify the parties’ 

roles and responsibilities during the project. The chief administrative officer 

referred to that meeting as a “disaster.” Commenting further, the chief 

administrative officer said that the project manager became angry and called 

the procurement managers “stupid” and referred to them as “obstructionists.” 

The project manager refused to adopt traditional relationships and procedures 

normal to a real estate acquisition and construction. The chief administrative 

officer said that, because he was angry at the project manager’s words and 

demeanor, he complained to the deputy director. According to the chief 

administrative officer, the deputy director told him to support the project 

manager and not to be an “obstructionist.”26 On February 12, 2003, the deputy 

director informed the acquisitions office director that it was “absolutely 

critical” for the project to be completed by the deadline.27

Throughout February, issues arose because the project manager preempted the 

real estate contracting officer’s role and responsibilities by negotiating 

agreements with contractors without the contracting officer’s approval. 

Because the contracting officer maintained responsibility for signing the 

agreements, the deputy administrator approved of the practice as one that 

would speed progress without violating the law. In one instance, the project 

manager directed the construction management firm to prepare an estimate for 

developing additional space. Upon learning of this, the real estate contracting 

officer sent an email message to the project manager requesting him to work 

with the procurement managers to document the new space needs and to allow 

the contracting officer to broach such issues with the contractor. The project 

 

24 We did receive a draft document entitled, “Draft Working Document, TSA Command Center (TSACC) 

Requirements,” dated July 8, 2002. This document listed, in broad terms, operational capabilities, information 

technology needs, as well as schedule milestones, with an occupancy estimated to occur in September 2003. It did not 

contain the details necessary to guide site selection, such as physical security, space, or budgetary requirements. 25 AMS § 5.3.10. 

26 The deputy administrator did not recall that conversation. 

27 The deputy administrator did not remember that conversation specifically, but does recall telling the acquisitions office 

director that the team had to “pull out all of the stops” to complete the project. 
Irregularities in the Development of the Transportation Security Operations Center Page 14 

manager replied: “all that administrative stuff will crush the timeline.... I 

know that workarounds make your life miserable, but there is no choice. We 

will not do anything illegal, but I will stretch the policies and bureaucracy to 

their absolute limits.” 

Again, the project manager usurped the real estate contracting officer’s 

authority without repercussion when he began negotiating a contract 

modification to the lease without involving the real estate contracting officer. 

The project manager negotiated with the construction management company 

to change the lease’s fee structure to the lessor’s favor. When the procurement 

managers learned of the negotiation, they advised against changing the lease 

because it would be disadvantageous to the government. Although the details 

of the proposal are complex and eventually were compromised, the following 

March 14, 2003, email from the acquisition office director to the chief systems 

support officer is illustrative of the nature of the debate: 

We have been asked by [the project manager] on several 

occasions to renegotiate the lease and raise the fee cap. We 

were asked by the lessor to reconsider the fee in February. 

We met with the lessor's representative, [construction 

management company], listened to their position, and 

determined to make no change to the current lease. 

 * * * 

[W]e consulted with our outside legal counsel on this issue. 

They strongly advised against renegotiating only one lease 

term. 

 * * * 

So our position is to tell [the project manager] we don’t need 

a meeting because there is nothing to discuss. As soon as we 

do that, [the deputy administrator], and then you, will get a 

call I’m sure. 

Additionally, the project manager initiated discussions with the construction 

management company to develop a proposal to accelerate construction in 

order to complete the building within 90 days. The contracting officer and 

other procurement managers objected, based on their knowledge that 

accelerated construction often brings considerably more expensive, timeconsuming problems, without a significant gain in the construction schedule. 

They argued that any advantages accelerated construction might bring would 

not justify the substantially increased costs. Instead of accepting the 

contracting officer’s authority to make such determinations, the project 

manager took the issue to the chief operating officer, who apparently agreed 

with the project manager. It appears that TSA paid either an additional 

$400,000 or $600,000 to substantially complete the project 30 days in advance 
Irregularities in the Development of the Transportation Security Operations Center Page 15 

of the original schedule. 28 TSA has been unable to locate documentation that 

confirms the cost, discusses cost and benefit considerations, or authorizes 

funds for the accelerated construction effort. Additionally, the lease should 

have been amended to reflect the change to an accelerated schedule. TSA 

could only produce a lease modification that mentioned a schedule change 

outlined in an attachment, but the attachment specifying the details was 

missing.29

Concerned about the legality and appropriateness of the actions taken by the 

project manager and fearing an audit, in mid-February 2003, some 

procurement managers drafted a delegation memo transferring contracting 

officer authority to the project manager. They reasoned that if they could not 

control the project, they should not bear the responsibility for it. The deputy 

administrator refused to sign the delegation memorandum because the project 

manager did not have a contracting officer’s warrant or the requisite training 

for that responsibility. The deputy administrator and others said that the 

project manager was the COTR for the project, despite the fact that the project 

manager had no training for that position.30 

In March 2003, a contract employee who provided the project manager with 

program management support was removed from the project for being an 

“obstructionist” and uncooperative, according to the project manager. Others, 

who worked with the contract employee, said that she was removed for 

insisting that acquisition rules be followed. Later, on April 7, 2003, the real 

estate contracting officer was removed at the chief operating officer’s request. 

The chief operating officer cited poor response time and poor understanding 

of the project as reasons for the real estate contracting officer’s dismissal. The 

procurement managers said that the contracting officer was removed because 

she too attempted to follow regulations and procedures, which necessarily 

slowed activities. 

The procurement managers attempted again to be released of responsibility for 

the project because they feared that their warrants were in jeopardy due to 

their inability to control the project’s irregular activities. They modified their 

original delegation memorandum to formally establish an oversight board that 

would have authority and responsibility for the project.31 On April 7, 2003, 

 

28 The $400,000 figure was taken from a schedule provided by the construction management company. However, 

according to an email message from the TSOC project manager, the accelerated construction costs were $600,000. 

29 TSA’s failure to maintain documentation of key contractual decisions is a violation of the Federal Management 

Records Act, 44 U.S.C. § 3101, and the AMS § 5.3.10. 30 The TSOC project manager denied that he was the project’s COTR and told us that he had never been informed that he 

was to serve as COTR. Additionally, the deputy administrator said that TSA allowed many people to work as COTRS 

without COTR training. 

31 According to the memorandum and charter, the oversight board’s purpose was to streamline the TSOC’s procurement 

process. However, the procurement managers responsible for drafting the memorandum said that their purpose in 

creating the oversight board was to shift responsibility for the project to another entity. 
Irregularities in the Development of the Transportation Security Operations Center Page 16 

the same day that the first real estate contracting officer was removed, the 

deputy administrator signed the memorandum and charter. The memorandum 

designated the deputy administrator as the chairperson and the chief operating 

and chief support systems officers as members. Others were to be invited as 

the board deemed necessary. The charter listed the oversight board’s principal 

roles, which included: 

• Approval of the strategy for construction of the facility, including 

requirements, costs, and schedule. 

• Approval of the key decisions related to the lease, including changes to 

costs, schedule, or requirements. 

• Assurance that lease functions are accomplished according to TSA 

policy and procedures and other applicable regulations and statutes. 

Although the oversight board’s charter granted many contracting officer 

responsibilities to the oversight board, the charter did not specifically relieve 

the contracting officers of their responsibilities for the real estate and the 

furniture, fixtures, and equipment contracts. 

The oversight board first convened on April 10, 2003, and it met at least eight 

times thereafter. The real estate and the furniture, fixtures, and equipment 

contracting officers were not invited to any of the meetings. There is 

disagreement as to whether the acquisitions office director was invited to 

more than one meeting.32 

The meetings were held regularly and featured a broad overview by the 

project manager of the project’s progress, budget, schedule, and risk issues. 

The project manager determined the topics presented to the oversight board; 

they tended to be high-level or non-controversial issues. For example, the 

more than 60 construction change orders, and the decision to purchase 

$370,000 in art and silk plants were not presented to the board. Of the issues 

that the project manager presented to the oversight board, almost all were 

accepted.33 When we asked the project manager whether the oversight board 

 

32 The acquisition office director and the chief systems support officer said that she was invited to the first meeting but 

not to any meetings thereafter; the deputy administrator and the project manager said that the acquisitions office director 

attended other meetings. 

33 Despite the fact that the oversight board met at least nine times, the deputy administrator recalled only one instance 

when the oversight board rejected a proposed construction plan modification by the project manager. In that instance, the 

project manager wanted to install a door between the Sensitive Compartmented Information Facility (SCIF) and the 

TSOC operations center. The oversight board rejected the project manager’s proposed modification because if the door 

had been installed, the entire TSOC operations center would have had to meet SCIF certification standards, which would 

have been cost prohibitive and unnecessary. The intelligence staff also objected to the plan to install the door. 
Irregularities in the Development of the Transportation Security Operations Center Page 17 

modified or disapproved his plans for the project, he said that “[they] gave me 

a wink and told me to keep going.” 

The oversight board was created to address procurement managers’ concerns 

that the project manager was violating procurement policy and regulations. Its 

charter included ensuring that the project activities were conducted according 

to procurement policy and regulations. The oversight board was ineffective in 

that it failed to obtain a complete and accurate understanding of the project 

manager’s decisions and activities, and did not detect or prevent the project 

manager from violating procurement policies and regulations. 

On April 17, 2003, the chief operating officer’s staff director said in an email 

message to participants in the project that, “[the project manager] is the 

executive agent/program manager for this project. He is directly responsible to 

the oversight committee for this entire project (as specifically iterated by [the 

chief support systems officer] at our oversight meeting last week).34 It is 

imperative that he be allowed to meet with vendors, contractors, and any other 

entity . . . .” The email message was in response to another disagreement 

regarding whether the project manager should initiate discussions with 

vendors without involving procurement managers. 

Also in April 2003, the acquisitions office director negotiated what was called 

a “hybrid” contracting officer authority model with the project manager. The 

chief administrative officer said that the director of acquisitions agreed to the 

compromised authority in order to break the “deadlock” between the project 

manager and the procurement managers. There was no statutory, regulatory, 

or policy statement authorizing the creation of hybrid contracting officer 

authority, which, in this instance, released the real estate contracting officer 

from some of his duties. Under the hybrid solution, the real estate contracting 

officer signed every pay application that the project manager submitted, 

without validating or questioning its legitimacy.35 The hybrid authority 

relinquished the real estate contracting officer’s responsibility to ensure that 

TSA paid a fair price for work that was acceptable. It obligated the real estate 

contracting officer to sign the pay applications within hours of receipt to 

facilitate prompt processing, too. If he were unavailable, the director of 

acquisitions would sign them instead. Having lost the authority to review 

requirements, negotiate with contractors, assist with space plans, monitor 

schedule progress, and validate pay applications, the contracting officer’s sole 

substantive role in the project was to ensure that purchases were obtained 

through a competitive process. 

 

34 The chief systems support officer does not recall making this statement. 35 Pay applications are the forms used to request the contracting officer to pay an invoice. Typically, the invoice and 

back-up documentation are attached to the pay application so that the contracting officer may confirm that the invoice is 

legitimate and that the government is obligated to pay it. 
Irregularities in the Development of the Transportation Security Operations Center Page 18 

In June 2003, the real estate contracting officer alerted personnel in the 

finance office of his concern about project expenses. Almost all project funds 

had been obligated, and if any change orders were issued, the real estate 

contracting officer warned that additional funding would be required. In 

addressing this matter, one finance staff member wrote of the project: “As far 

as I can tell, there are no milestones set . . . . Those are the kinds of questions 

you can’t get answered in any kind of concrete way.” The TSA finance office 

had limited insight into this project. Senior management had established the 

project’s budget, and the finance office employees who we interviewed could 

not locate documentation justifying the budget or explaining how it was 

determined. In addition, the finance office was not provided with a 

construction schedule to measure accrued costs against progress. It was not 

until August 2003, when the project manager submitted a purchase request36

for $574,042 of additional funding that the finance office and the real estate 

contracting officer learned that the project manager had negotiated and 

approved construction change orders without notifying them. 37

The AMS allows only contracting officers to enter into contracts, agreements, 

and other transactions on behalf of the organization.38 The project manager 

violated the AMS by negotiating directly with vendors and by committing 

TSA to financial agreements with the construction management company. The 

$574,042 purchase request described the need for the additional funding as 

“approved construction change orders,” but did not include any supporting 

documentation detailing the change orders. The construction management 

company provided us with a series of spreadsheets that listed the more than 60 

change orders. A spreadsheet dated September 8, 2003, which is closest in 

time to the purchase request, shows change orders that total $542,586. The 

difference between the purchase request funding for change orders and the 

total shown on the spreadsheet was $31,456. We have been unable to 

determine what changes this amount represented. The most recent spreadsheet 

that we obtained is dated October 2, 2003, and lists $548,637 in change 

orders, leaving approximately $25,000 in unaccounted funds. 

Subsequent to the project’s conclusion in November 2003, TSA issued a 

management directive providing policy and procedures for the acquisition and 

renovation of office space. On April 6, 2004, TSA’s office of acquisition 

issued an Internal Guidance and Procedure Memorandum 306 that establishes 

the acquisition office’s concept of operations and lists contracting officers’ 

roles and responsibilities. Because the provisions of the directive and the 

memorandum were not in place during the project, TSA cannot be held to 

 

36 A purchase request is a document used to set aside government funds for a specific purchase. The funds are drawn 

against it through submission of pay applications. 

37 The change orders brought the project over budget, requiring additional funds to be secured for project tasks that had 

already been completed. 

38 AMS § 3.1.4. 
Irregularities in the Development of the Transportation Security Operations Center Page 19 

them. However, they do provide a point of contrast. The duties outlined in the 

detailed documents reflect AMS policy and standard federal acquisition 

procedures. Despite the procurement managers’ attempts to impose many of 

the procedures listed in the documents, the deputy administrator and chief 

operating officer allowed the project manager to ignore them. 

Senior management’s refusal to support the procurement managers’ authority 

and their determination to complete the construction within a self-imposed 

deadline contributed to numerous instances of blatant disregard for proper 

procurement processes. This disregard for procurement rules and procedures 

created a culture of disrespect for those rules. As a result, additional 

violations, which are described below, occurred. 

Acquisition of Art, Plants, and Miscellaneous Office Supplies 

In June 2003, approximately one month before the TSOC/SOCD building 

opened, the project manager decided to decorate the facility. The project 

manager and the facility operations officer paid $500,000 to a tool company 

for artwork, decorative items, and miscellaneous supplies. The agreement to 

purchase the items was never committed to writing. The facility operations 

officer insisted that the tool company submit its invoice before the purchases 

had been finalized. The tool company used its estimated costs to develop the 

$500,000 total. TSA was unable to provide us with either the estimated 

accounting or the final accounting of the items purchased. Upon our request, 

the tool company provided us with its final list of products delivered under the 

agreement and information for determining the actual costs for each.39

Following our line-by-line accounting of the more than 70 items purchased, 

we determined the actual costs of the items purchased, as follows: 

• $252,392 for artwork. 

• $29,032 for the services of an art consultant and her assistant. 

• $30,085 for decorative silk plants. 

• $13,861 for miscellaneous office supplies. 

The agreement included a 20% mark-up, which we calculated to be $65,074,40

and a credit of $26,243 for future purchases.41 These actual costs totaled 

 

39 The vendor gave us the invoices it received from the providers of goods and services. We reconciled the invoices’ 

products and costs with the vendor’s final list of products, such as artwork, plants, and miscellaneous items, to determine 

the actual costs for each product or service provided under the agreement. 

40 We had to determine the terms of the oral agreement from the parties’ recollections during our interviews. The facility 

operations officer told us that the agreement between the parties was that the vendor would pass the direct costs of the 
Irregularities in the Development of the Transportation Security Operations Center Page 20 

$414,687. The remaining $83,313, which is the difference between the tool 

company’s estimated and actual costs, was an overcharge. Neither the tool 

company nor TSA reconciled the final costs with the invoiced estimated costs. 

Accordingly, the vendor received an $83,313 overpayment. 

The purchase of approximately $370,000 for art and silk plants to decorate an 

office closed to the public and accommodating approximately 79 federal 

employees was excessive and wasteful.42 Furthermore, the $26,243 credit 

allowed purchases that did not require approval or tracking. Establishing such 

a credit violates a federal statute prohibiting advance payments.43 The $83,313 

overcharge is a violation of the same statute, which bans payments exceeding 

the value of the article purchased.44

When a federal entity seeks to decorate new office space, it must devise a plan 

for decorating the building, which should be approved by the agency.45 The 

AMS rules and federal regulations provide that only contracting officers 

should enter into agreements and contracts46 and that those agreements should 

be documented in writing.47 

The project manager did not form a plan. Instead, without approval, he 

decided in June that the building should have art on the walls for its July 

opening. He asked the facility operations officer to obtain the art and purchase 

it using the real estate construction funding. The facility operations officer 

said that time constraints did not allow for the competitive bidding process. 

He spoke with one vendor, but disliked the initial price quoted. He then 

contacted a former business associate, the owner of a tool company, which 

became the “vendor.” Never had the tool company offered an interior 

decorating or art supply line of business before. Yet, it agreed to select, 

purchase, and install the art and plants for the TSOC project. The agreement 

was never documented. We had to rely, therefore, on the recollections and 

representations of the facility operations officer and the tool company, which 

varied. Moreover, the project manager and facility operations officer did not 

 

art, silk plants, and miscellaneous items to TSA. The tool company would pay the shipping costs and charge a mark-up 

fee of 30%. The tool company’s attorney told us that the markup fee was 20% based on estimated costs and that the tool 

company did not charge for labor, overhead, or expenses. He also characterized the agreement as a fixed price contract 

based on estimated costs. 

41 Eventually, the TSOC expended the credit with purchases of office supplies and furniture. 

42 This figure comprises 49 FAMS and 30 TSOC employees. 43 31 U.S.C § 3324. Advance payments for certain contract financing are permissible under 41 U.S.C. § 255, which 

permits such payments when they follow certain procedures. However, as far as we can determine, the facility operations 

officer did not follow the law. 

44 Ibid. 

45 41 C.F.R. § 101-26.103-2 (2003). 

46 AMS § 3.1.4. 

47 31 U.S.C. § 1501 (a)(1). 
Irregularities in the Development of the Transportation Security Operations Center Page 21 

inform the real estate contracting officer about the agreement to purchase 

decorative items. 

Before all the art was purchased and at the facility operations officer’s urging, 

the tool company submitted an initial invoice for project “enhancements” of 

$473,757, which was based on the tool company’s estimate of costs. The 

facility operations officer asked the tool company to withdraw the invoice and 

instead issue three, which together would total $500,000. The facility 

operations officer instructed the tool company to submit the invoices to the 

construction management company and label the purchases as “equipment and 

tools.” Labeling the purchases as “equipment and tools” would make them 

appear to be within the scope of the real estate contract when in fact they were 

outside its scope. The facility operations officer also instructed the vendor that 

the $26,243 difference was to be treated as a credit from which TSA could 

order additional, unspecified items. 

Representatives from the tool company said the tool company had to 

“manually construct” the three new invoices because its accounting system 

did not have the capability to change invoices after they had been issued. It 

submitted the three new invoices to the construction management company in 

the amounts of $159,000, $175,000, and $166,000 for a total of $500,000. 

Instead of following the facility operations officer’s instruction, the invoices 

referred to the purchases as “furniture, fixtures, and equipment.” 

The construction management company initially resisted accepting the 

invoices and incorporating them into its bill to TSA. Under pressure from the 

project manager, however, it added the charges to its list of change orders. 

Although the project manager and construction company completed 

paperwork documenting each of the more than 60 other changes, change order 

paperwork for the change order relating to the $500,000 purchase was not 

completed. Upon advice from legal counsel, the construction management 

company did not follow the project manager’s suggestion to add its own 

mark-up to the three invoices, due to the irregularity of the transaction. 

The artwork arrived in separate shipments. The pieces were not inventoried, 

and no one confirmed that all of the pieces that had been ordered were 

delivered. While it appears that the tool company shipped the complete order, 

we had difficulty locating all of the art listed on the invoice. Much of it had 

been removed, especially in the offices, so that the occupants could install 

their own photographs, art, and memorabilia. In addition, TSA could not give 

us any records of the purchase, other than the purchase request for change 

orders submitted by the project manager. TSA did not have copies of the tool 

company’s invoices, the shipping documents, supplier receipts, cost estimates, 
Irregularities in the Development of the Transportation Security Operations Center Page 22 

or email messages documenting purchase selections. We recovered those 

documents from the tool company.48 

We found no evidence that TSA independently evaluated the reasonableness 

of the tool company’s price, questioned the suitability of using a tool company 

to buy art, or ensured that funding was available for this obligation. 

Use of Purchase Cards 

The federal purchase card program was initiated in 1985 to streamline 

procurement of small dollar purchases. In 1994, the program was simplified to 

exempt “micro-purchases” of $2,500 or less from the general requirement for 

competition and other procurement rules, instead allowing them to be 

obtained with a P-card. TSA adopted the P-card program and produced a 

manual detailing the policies and procedures for P-card use.49 The P-card 

manual permits the purchase of low cost supplies, such as cables, computer 

keyboards, cell phone batteries, and other inexpensive items. 

In August 2003, TSA issued P-cards to two project members: one to the 

facility operations officer, who had an initial $35,000 monthly purchase limit; 

and the other to a TSOC employee who had a $10,000 monthly limit.50 The 

project manager was the approving official for both. The two P-card holders 

purchased supplies and other items for the TSOC/SOCD. TSA’s P-card 

program management detected anomalies in the project’s P-card usage in 

September 2003. Apparent violations continued in the ensuing months. In 

November 2003, due to growing concern about possible abuses, 

P-card program officials referred the project’s P-card problems to OIAPR. 

OIAPR reviewed the situation and in May 2004 submitted its findings to our 

office for review. 

General P-card Policy Violations

Each P-card holder is monitored by an approving official who is responsible 

for guarding against P-card abuse, as well as for reporting P-card misuse.51 A 

TSA P-card holder must receive prior written authorization for a purchase 

from the approving official and must maintain a log of purchases for monthly 

review by the approving official. TSA provided a purchase log template to 

 

48 These omissions in record keeping violated the Federal Records Management Act, which requires government 

employees to maintain records of purchases. 44 U.S.C. § 3101. 

49 We relied upon the TSA Purchase Card Manual (2004) for this information because TSA was not able to locate the 

2003 manual. We were able to confirm that the rules cited in the 2004 manual were the same as those listed in the 2003 

manual. 

50 Both P-card holders’ monthly limits were raised to $50,000 on September 25, 2003. 

51 TSA Purchase Card Manual (2004). 
Irregularities in the Development of the Transportation Security Operations Center Page 23 

P-card holders to assist them in establishing and maintaining the logs. In 

addition to issuing prior written authorization for each purchase, approving 

officials are required to review the purchases each month, ensure that the 

P-card holders maintain their purchase logs, and report any P-card misuse.52

The two P-card holders used their P-cards to purchase $136,589 in goods from 

August through January 2003.53 They did so without obtaining prior 

authorization from the approving official and without logging their purchases. 

The approving official did not review their monthly purchases or ensure that 

they maintained their purchase logs during that period. 

 

52 Ibid. 

53 The facility operations officer left employment with TSA in October 2003. He used his P-card purchases in August 

through September 2003 only. 
Irregularities in the Development of the Transportation Security Operations Center Page 24 

Split Purchases

TSA P-card policy prohibits P-card holders from “splitting” purchases, a 

means for exceeding the $2,500 limit by breaking the purchase cost of an item 

of equipment, supplies, or services into smaller amounts and invoicing the 

amounts separately. The prohibition against split purchases was conveyed to 

the project’s P-card holders in the online P-card training and through the cover 

letter that accompanied the P-cards. 

Both P-card holders engaged in split purchases with the tool company that had 

provided the $500,000 of art, silk plants, and miscellaneous items. The P-card 

holders not only ordered purchases well in excess of the $2,500 single 

purchase limit, but also communicated with the tool company to split the 

purchases so that numerous credit card transactions would be created, each for 

under $2,500, until the total purchase price was achieved. For example, in 

regard to one large $47,449 purchase, the tool company sent an email message 

to both P-card holders asking, “let me know which credit card you want this 

processed on if the limits are $2,500 per day I will need to hit the card 

multiple times.” In an email message one week later about the same purchase, 

the tool company wrote to the facility operations officer, “Your large order 

total amount $47,449,54 I have ran $22,422 to date with a balance to run of 

$25,025; I have been running a different amount each time.” 

Between August 2003 and November 2003, the single purchase amount was 

exceeded ten times with the tool company splitting the purchases over 58 

credit card transactions. The total expenditure for the ten split transactions was 

$121,897, and individual purchase prices ranged from $3,350 to $47,449. 

With regard to the latter, the cardholder not only exceeded the $2,500 limit, 

but the $35,000 monthly limit amount, as well. 

 

54 The original order was for $47,449. Subsequent changes to the order brought its total purchase price to $47,727. 
Irregularities in the Development of the Transportation Security Operations Center Page 25 

Date Purchase 

Price 

Number of

Credit Card 

Transactions 

Description 

9/2/03 $7,470 3 Printer toner cartridges 

9/9/03 $47,449 22 Furniture, briefcases, coffee pots, 

100 TSOC desk kits

9/25/03 $13,000 6 2 storage containers 

9/26/03 $3,350 2 Projector and bulbs 

10/17/03 $5,226 3 Furniture, projection screen, office 

supplies 

10/20/03 $6,886 3 Furniture, general office supplies 

10/23/03 $11,672 5 Printer toner cartridges 

11/5/03 $17,850 10 SOCD desk kits, office supplies 

11/5/03 $4,165 2 Office supplies 

11/18/03 $3,082 2 Office supplies 

Total: $120,150 58

 Table 1: Summary of Split Transactions

 

Inappropriate, Costly Purchases

TSA P-card policy prohibits the use of P-cards to purchase personal 

convenience items, such as coffee pots and televisions, unless the item

supports TSA mission-related purposes. Only a P-card program official, the 

organization point of contract, can make exceptions to that rule after receiving 

written justification of a bona fide need for the items.55 P-cards may not be 

used to purchase furniture.56

In violation of TSA P-card policy, the two P-card holders used the cards to 

acquire personal goods, such as 10 coffee pots, 3 leather briefcases, and 52 

coffee mugs, from the tool company. The P-card holders did not submit the 

required written justification to the organization point of contract to obtain 

authorization for these purchases. They also purchased from the tool company 

chairs, loveseats, tables, lecterns, and armoires with their P-cards, items 

expressly forbidden by TSA P-card policy. 

The Federal Property Management Regulations require each agency to 

establish personal property inventory systems to ensure that the total cost of

personal property purchases are kept to a minimum.57 One of the P-card 

holders ordered, from the tool company, 100 “desk kits,” which cost $359 

each.58 Because the supplies had to be broken out and assembled into 

 55 TSA Purchase Card Manual (2004). 56 TSA Purchase Card Manual (2004). TSA Real Estate Services Policy Manual, October 23, 2002. 57 41 C.F.R. § 101-27.101. 58 The desk kits included various office necessities such as legal pads, pens, a trashcan, and a stapler. 
Irregularities in the Development of the Transportation Security Operations Center Page 26 

separately boxed kits, they were more costly than simply purchasing the 

supplies in bulk and storing them in a central location. 

Vendor Choice

From September through January 2003, the P-card holders used their P-cards 

to purchase $136,589 in supplies from the tool company.59 As with the sale of 

art, the tool company had never before sold office supplies until the facility 

operations officer asked it to do so for the facility.60 The facility operations 

officer told the other P-card holder that the tool company was the preferred 

vendor for providing the supplies they sought to purchase. The two spent 

$3,096 on their P-cards in August 2003; $2,381 of that amount, or 77%, went 

to purchases from the tool company. In September, $77,641 of the $95,398, or 

81%, of their total P-card expenditures went to the tool company; 98% of the 

money spent on their P-cards went to the tool company in October. In 

November 2003, 83% of the P-card expenditures went to the tool company. 

The P-card program office detected split and improper purchases from the tool 

company in December 2003 and spoke with P-card holder about them. The 

percentage of money directed to the tool company on P-card purchases 

declined in December to 24%, and in January it dropped to 7%. The tool 

company provided us with some of the wholesalers’ invoices for the TSOC 

supplies. We compared the costs to the tool company as reflected in those 

invoices with the costs the tool company charged TSA to determine the 

vendor’s mark-up. The mark-up the tool company received for those 

purchases varied from 22% to 78%. 

P-card holders’ purchases for this period are summarized in Table 2, below: 

Month 

Purchase 

Amount with 

Tool Co. 

Purchase 

Amount with 

All Other 

Vendors 

Total 

Purchase 

Amount for 

All Vendors 

Percentage of 

Purchase Amount 

Directed to Tool 

Co. 

August $2,381 $715 $3,096 77% 

September $77,641 $17,757 $95,398 81% 

October $27,384 $651 $28,035 98% 

November $26,536 $5,296 $31,832 83% 

December $1,907 $6,019 $7,926 24% 

January $740 $9,173 $9,913 7% 

Total: $136,589 $39,610 $176,200 78% 

Table 2: P-card Purchase Summary 

 

59 The combined total of artwork, decorative furnishings, and office supplies bought from the tool company was 

$620,344. 

60 The tool company eventually created a separate company that offers office supplies through a GSA schedule. The 

business has grown and serves more than 80 federal, state, and private customers. The art supply line of business was 

closed after the TSOC project was completed. 
Irregularities in the Development of the Transportation Security Operations Center Page 27 

P-card Certification Impropriety

The two P-card holders may not have taken the mandatory training and the 

test necessary to obtain a P-card.61 A TSA employee reported that a contractor 

working at the TSOC took the test for the two P-card holders in violation of 

TSA policy. When questioned about the allegation, one of the P-card holders 

confirmed that he did not take the test; the other cardholder said that a 

contractor entered the online test site at the computer while the P-card holder 

told him which answers to enter. The contractor confirmed the report of the 

latter P-card holder and said that he entered the answers provided to him by 

the former P-card holder. Given the frequency and severity of the P-card 

infractions, it appears that either the P-card holders did not know the P-card 

rules and passed the P-card test by wrongfully receiving assistance, or they 

knew the rules and willfully violated them. 

Questions of Impartiality 

The TSOC facility operations officer had a prior business and personal 

relationship with the owners of the tool company from which he made the art 

and silk plant purchases, as well as most of the P-card acquisitions. The tool 

company’s owners had sold merchandise at a store that the facility operations 

officer had managed before he began working for TSA at the TSOC. 

Additionally, in September 2002, the tool company owners had offered this 

person a position with its subsidiary as vice president of global sales. He 

declined the position. In April 2003, he secured the TSOC facility operations 

officer position. On the questionnaire for national security positions, a form 

that federal employees must complete, he listed one of the tool company’s 

owners as a personal reference. 

Federal law and the TSA Guide to Major Ethics Rules direct employees to act 

impartially and not give preferential treatment to anyone or any 

organization.62 Additionally, employees may not use their public office for 

private gain.63 Employees are instructed to avoid any actions that would create 

the appearance that they are violating legal or ethical standards.64 

In June 2003, within three months of being hired by TSA, the facility 

operations officer asked the tool company to supply art, silk plants, and other 

non-tool related items for the TSOC. Although the tool company successfully 

provided those items, the decision to contract with them was questionable, in 

 

61 TSA policy requires prospective P-card holders to undergo a GSA web-based training course and test. Upon successful 

completion of the test, a certificate is issued and TSA secures a P-card for the applicant. 62 Financial Conflicts of Interest, 5 C.F.R. § 2635 part D. 63 Ibid. 

64 Ibid. 
Irregularities in the Development of the Transportation Security Operations Center Page 28 

that they had not offered that line of business in the past. Furthermore, the 

decision was exacerbated because the tool company was not selected as a 

result of a competitive bidding process, which calls into question the facility 

operations officer’s impartiality. Finally, a purchase agreement between TSA 

and the tool company was not documented, and the facility operations officer 

instructed the tool company to describe the purchase inaccurately in its 

invoice. The facility operations officer’s action in that regard suggests that the 

he attempted to conceal the nature of his dealings with the tool company. The 

facility operations officer’s decision to use a company that had no history of 

providing the services sought; his failure to use a competitive bidding process 

to select a supplier; and, his apparent attempts to conceal certain transactions 

raise concerns about adherence to his ethical obligations. 

The facility operations officer’s motivations are further impugned by his 

actions a few months later. In September, he asked the tool company to 

expand its line of business to include providing office supplies. He instructed 

the other P-card holder that the tool company was the provider of choice for 

office supplies. Throughout September, he and the other TSOC P-card holder 

used their cards to purchase items prohibited by P-card policy from the tool 

company, and they engaged in transactions with the tool company to conceal 

their violations of P-card policy. Sometime in October 2003, the facility 

operations officer resigned from his TSA position.65 Within a few weeks, he 

started a new business venture with the owners of the tool company, receiving 

shares of the new company’s stock and an annual salary increase of 

approximately $34,000.66 

The facility operations officer violated TSA rules and federal regulations to 

avoid the appearance of ethical conflicts, and may have violated the 

requirements to be impartial and not use his public position for private gain. 

We have referred this matter to the Department of Justice for consideration of 

further action. 

Facility Enhancements 

Fitness Center

While planning the SOCD, as a component of the FAA, FAMS decided to 

equip the facility with a fitness center. Subsequently, TSA determined that the 

TSOC should have a fitness center also. Once it was evident that the 

organizations would share operational space, FAMS and TSA decided to 

 

65 TSA did not prepare documentation specifying the facility operations officer’s actual departure date from TSA 

employment. TSA was able to confirm that a paycheck was issued to him for the period ending October 30, 2003, but 

cannot determine how many days he worked during that pay period. 

66 The new business was incorporated on October 23, 2003. 
Irregularities in the Development of the Transportation Security Operations Center Page 29 

combine fitness centers. Unlike the fitness center project at TSA headquarters, 

for which an analysis of the requirements was completed and an 

administrative process was established to guide its development, the project 

manager did not conduct an adequate analysis or obtain approval to justify 

building and equipping the TSOC portion of the fitness center. We confirmed 

that a struggle existed between the procurement managers and the project 

manager regarding the fitness center. The deputy administrator told us that he 

had ordered that the fitness center not be equipped. On the other hand, the 

project manager said that the deputy administrator had supported it. There is 

no documentation to confirm either account. Despite the concerns of the 

procurement managers and, perhaps, those of the deputy administrator, a 

fitness center was built. 

The TSOC/SOCD exercise facility is 4,250 square feet. Total construction and 

equipment costs were approximately $350,000. There is an additional monthly 

charge included in the building rent for towel laundry service. At the time it 

was constructed and outfitted, 30 TSOC and 49 SOCD employees worked at 

the facility. Of the 49 SOCD personnel, only a few had position descriptions 

with a mandatory physical fitness requirement. 

TSA began construction of a 6,921 square foot fitness center for 

approximately 2,550 employees at its headquarters building in the fall of 

2004. The estimated cost to construct and equip the headquarters’ facility is 

$650,000.67 As shown in Table 3, the headquarters fitness center will serve 

about 2,480 more staff members than TSOC/SOCD’s fitness center, yet the 

headquarters facility is only slightly larger. The disparity in the size and 

potential serviceability of the fitness centers is evident when comparing the 

ratio of square footage per user. At the headquarters fitness center, if just 15% 

or about 380 staff used the center simultaneously, each user would have about 

18 square feet of workout space. However, if all 79 TSOC/SCOD staff used 

the TSOC facility at the same time, an unlikely scenario, each would have 

about 54 square feet or approximately three times the workout space. 

Table 3: TSOC/SOCD and Headquarters Fitness Center Summary

Fitness Center

Location 

# Employees

Fitness Center to 

Accommodate

Total Square

Footage 

Construction/ Exercise 

Equipment Costs 

Headquarters 2,550 6,921 $650,000

TSOC/SOCD 79 4,250 $350,000

Federal agencies may provide fitness centers and programs to their employees 

as a preventative health service under federal regulations.68 However, both 

 67 The headquarters fitness center also will require user fees to support its operations and new equipment needs. 68 64 Comp. Gen. § 835 (1985). 
Irregularities in the Development of the Transportation Security Operations Center Page 30 

GAO and Office of Personnel Management policy caution that such 

expenditures should be carefully monitored.69 TSA did not carefully monitor 

fitness center costs, and in comparison to its headquarters fitness center, the 

TSOC/SOCD’s costs and size are wasteful. 

Kitchen Appliances

When the project manager and the construction management company were 

conducting initial planning for the TSOC/SOCD, estimates to develop the 

property included $9,750 for equipping seven kitchens with the following 

appliances: five refrigerators, three dishwashers, four microwave ovens, and 

three ice makers. The plans also included an additional refrigerator, 

microwave oven, dishwasher, and icemaker for the CAPPS II program. After 

the initial estimate was developed, the CAPPS II program decided not to 

locate in the building. The space that was to be dedicated to CAPPS II was not 

developed, including the associated kitchen space. The project manager 

decided to purchase an additional five refrigerators, two of which were 

stainless steel Subzero models that cost more than $3,000 each, one less 

dishwasher, five additional microwave ovens, and one additional icemaker. 

The total for the new purchases was $17,853, almost double the original 

estimate. 

The project manager strayed from the original construction estimate by 

increasing the number of appliances, thus doubling the cost, without 

justification or approval from senior management or the real estate contracting 

officer. The contracting officer disputed the purchase of some of the 

appliances, but when rebuffed by the project manager, acceded to him. 

Federal agencies may provide kitchens for personnel to contribute to the 

efficiency of the agency’s operations and the health of personnel.70 A recent 

Comptroller General decision advises that agencies should develop a policy to 

limit costs, review need for specific equipment, and establish a budget for 

equipping the kitchens.71 TSA did not have a policy in place when the project 

manager provided kitchens for the TSOC/SOCD employees. There was no 

process or documentation indicating that the number and style of appliances 

and the number of kitchens for approximately 140 federal and contract 

employees was warranted. 

Office Space Utilization

 

69 70 Comp. Gen. § 190 (B-240371, January 18, 1991); Principles of Federal Appropriations Law, Third Edition (2004), 

Chapter 4, p. 4-247-248. 

70 B-302993 Comp. Gen. (June 25, 2004). 

71 Ibid. 
Irregularities in the Development of the Transportation Security Operations Center Page 31 

In December 2002, TSA senior management finalized the TSOC/SOCD space 

plans without consulting with the contracting officer, in violation of the 

AMS.72 The plan’s workstation areas and office sizes appeared to be within 

acceptable government standards. The project manager approved the space 

plans and never provided the contracting officer with a copy. The first set of 

working blue prints used to start construction on the facility was delivered in 

April 2003. After the permit drawings for the project were delivered in May 

2003, the project manager decided, without authorization from senior 

management or the contracting officer, to modify the original plans by 

increasing the office sizes and altering most of the workstation sizes. The cost 

for construction and design changes was $8,144. The project manager 

exceeded the scope of his authority by making a unilateral decision to increase 

the size of workspaces without approval from senior management, and by 

committing TSA to construction changes, a role that the AMS rules reserve 

for contracting officers.73 

The project manager modified all of the offices and many of the workstation 

sizes to exceed TSA space standards, some by as much as 100%. TSA space 

standards allow 300 square feet for senior executive offices and 225 feet for 

executive offices, yet both senior executive and executive offices at the 

facility are 342 square feet.74 Supervisors in pay bands L, K, and J are 

authorized to have 120 square foot offices, according to TSA space standards. 

Those employees occupy offices up to 240 square feet or twice the size 

authorized by TSA space standards. TSA standards allot workstations of 64 

square feet to pay bands A through G, non-supervisory pay bands L, K and J, 

and all contractors. The TSOC workstations vary in size from 48 square feet 

to 96 square feet, some falling within the standard and some exceeding it. 

The following table compares TSA standards for workspace sizes and the 

extent to which the project manager exceeded the standard: 

Space Type 

TSA 

Standard 

Size 

(sq. ft.) 

Maximum 

TSOC 

Size 

(sq. ft.) 

Space 

Exceeding the 

Standard 

(sq. ft.) 

% Exceeding 

Standard 

Office - Sr. Exec SW01 300 342 42 14% 

Office - Executive 225 342 117 52% 

Office - Pay Bands L-K, 

Supervisors 120 240 120 100% 

Workstation - Pay Bands 

L-K, non-supervisory 

Pay Bands A-G, 

Contractors 

64 96 32 50% 

 

72 AMS § 5.3.2. 

73 AMS Appendix A, Roles and Responsibilities. 

74 TSA provided us with the square footage of the TSOC/SOCD offices and workspaces. 
Irregularities in the Development of the Transportation Security Operations Center Page 32 

Table 4: Workspace exceeding TSA Standards 

Additionally, some of the assignments of personnel to TSOC’s workspace 

were questionable or improper. The project manager placed himself in one of 

the 342 square foot offices, although TSA space standards granted his pay 

band position a 120 square foot office. Others are currently placed improperly 

as well. Some non-supervisory pay band K and L employees occupy the 120 

square foot offices when TSA space standards allocate 64 square foot 

workstations to those positions. Similarly, several contract employees should 

have 64 square foot workstations, but occupy offices that are twice as large. 

Two of the four largest offices were developed for the TSA Assistant 

Secretary and the chief operating officer. The permanent offices for those 

positions are located at the TSA headquarters building. Accordingly, two of 

the TSOC’s senior executive offices are unoccupied. 

In addition to increasing the size of offices, the project manager decided to 

provide cable television service and desktop television monitors in 45 of the 

55 TSOC/SOCD offices. The desktop monitors are part of a Unisys 

Information Technology Management Services contract in which TSA rents 

these monitors for three years at a total cost of $63,099. TSA was unable to 

provide any justification or documentation supporting the need for 45 desktop 

television monitors. Without the documentation, we could not find a 

reasonable explanation for the procurement. The number of employees 

receiving cable televisions seems extraordinarily excessive given the adjacent 

command and operations center. Moreover, at the end of three years, the 

televisions belong to the contractor, not to TSA. 

Surge Capacity

After this report was written in draft, we received comments asserting that the 

enhanced kitchen and office space capacities were justified because the TSOC 

was planned as a crisis management facility that would house, and presumably 

feed, a large contingent of temporary workers responding to a crisis. The 

argument was supported by examples in which the TSOC was used during 

National Special Security Events. However, none of our interviews of TSA 

employees and none of the documents that were provided to us evidence an 

expectation or plan to overbuild the facility to accommodate such workforce 

surges. Contemporary planning or mission documents available to us do not 

indicate that the number of workstations, size of the gym, or the number of 

kitchens and kitchen appliances was determined on the basis of a plan to 

handle a surge capacity. In carefully reviewing documents after the surge 

capacity argument was raised, we found one reference as follows: “Manned 

24/7 by a small cadre, with crisis response cells ‘standing-up’ when 
Irregularities in the Development of the Transportation Security Operations Center Page 33 

required.” (Emphasis added).75 Later documents, more proximate to the 

planning and construction of the TSOC, are not more specific. The building 

plans, 12.16.02 revision, are not informative. While use of the center for 

continuity of operations, continuity of government, or crisis situation room 

may have been roughly contemplated, and while it is clear now that the center 

has extra space that may house a workforce surge, we found no evidence 

during our review that would relate such plans to the size of the facility and to 

the amount of what we called its “enhancements.” 

Recommendations

 

 We recommend that the TSA Assistant Secretary: 

Recommendation 1: Follow TSA policy, as well as applicable federal 

regulations, when acquiring real estate and procuring goods and services. The 

policy and regulations establish procedures to help ensure that funding is 

spent prudently. Although following the procedures may increase the amount 

of time necessary to complete purchases, it will protect TSA from wasteful 

and abusive acts. Specifically, the TSA Assistant Secretary should: 

a) Ensure that TSA procurement personnel coordinate all procurements 

with their TSA customer. 

b) Ensure that the requirements for all projects are defined, documented, 

and followed, so that program objectives are met in the most costeffective manner. 

Recommendation 2: Ensure that all contracting officers and contracting 

officers’ technical representatives receive training appropriate for those 

positions. 

Recommendation 3: Recover the $83,313 overpayment to the tool company 

and such other sums for which it may have a legal remedy. 

 

75 TSA Command Center (TSACC) – Operational Concept – Executive Summary, July 23, 2002 version.” 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 34 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 35 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 36 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 37 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 38 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 39 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 40 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 41 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 42 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 43 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 44 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 45 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 46 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 47 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 48 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 49 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 50 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 51 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 52 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 53 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 54 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 55 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 56 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 57 
Appendix A 

Management Comments 

______________________________________________________________________________________

Irregularities in the Development of the Transportation Security Operations Center Page 58 
Appendix B 

OIG Evaluation of Management Comments

______________________________________________________________________________________

We evaluated TSA’s written comments and made changes to the 

report where deemed appropriate. Below is a summary of TSA’s 

written response to our recommendations and our analysis of those 

comments. 

TSA Response: TSA generally concurs with our recommendations 

for corrective actions but disagrees with several significant 

conclusions in our report. TSA challenges the report’s failure to 

acknowledge its need to achieve a command and control capability 

over aviation security incidents as rapidly as possible and the 

legitimacy of its 90-day construction deadline. Further, TSA 

asserts that the TSOC possesses a surge capacity that justifies the 

office space, kitchen, and gym sizes. TSA also questions the 

report’s implication that procurement officials delegated 

procurement authority to the project manager and the report’s 

description of the Oversight Board’s role. 

OIG Evaluation: It was TSA’s contracting officials who objected 

to accelerating the build-out schedule. Early concept plans and the 

later actual construction contract provided for a later possible 

completion date, which suggests that TSA had some discretion in 

the matter. As reported, we could not find documentation from the 

time that addressed the question or stated the case for acceleration. 

In fact, whether the abuses we described occurred as part of a 90-

day, or 120-day, or 180-day schedule, they still remain 

unacceptable and wasteful. The reason why we discuss the 90-day 

schedule is because of the effect that determination had on 

management’s objections to the issues raised by TSA contracting 

and real estate personnel and, thus, on the autonomy afforded to 

the project manager. 

TSA also asserted that the report failed to recognize the surge 

capacity built into the facility. We have added a discussion of that 

argument in the main body of the report. We do not dismiss TSA’s 

argument; certainly it has some support in terms of the facility’s 

present capacity, but we did not find evidence that it determined 

the configuration and outfitting of the TSOC at the time those 

decisions were being made. 

With respect to the delegation of procurement authority to the

project manager, our report recounts that the deputy administrator 

refused to sign the delegation. However, the director of 

acquisitions negotiated a “hybrid” contracting officer authority 

with the project manager, under which the real estate contracting 

Irregularities in the Development of the Transportation Security Operations Center Page 59 
Appendix B 

OIG Evaluation of Management Comments

______________________________________________________________________________________

officer maintained the authority to ensure competition for 

purchases, but abandoned the responsibility to review invoices 

submitted by the project manager. TSA asserts that the Oversight 

Board only dealt with higher-level issues and was not expected to 

review individual change orders or equipment purchases. We

understand that the Board was not a planned oversight mechanism;

it was created to resolve the disputes arising between the project 

manager and the contracting and real estate offices – the kind of 

disputes that did involve change orders and purchases. Had it 

reviewed such transactions, the wasteful and inappropriate 

expenditures reported might have been blocked. 

TSA’s response does not address the substantive issues pointed out 

in the report regarding “gold plating” of the facility, i.e., the subzero refrigerators, furniture, TV monitors, etc., artwork, and other 

decorative items. In addition, TSA’s assertion that implies 

misconduct solely by “lower level” employees is incorrect. The 

decisions to purchase the artwork and other decorative items and to 

enhance the facility were made by higher-level managers. 

Recommendation 1: Follow TSA policy, as well as applicable 

federal regulations, when acquiring real estate and procuring goods 

and services. The policy and regulations establish procedures to 

help ensure that funding is spent prudently. Although following the 

procedures may increase the amount of time necessary to complete 

purchases, it will protect TSA from wasteful and abusive acts. 

Specifically, the TSA Assistant Secretary should: 

a) Ensure that TSA procurement personnel coordinate all 

procurements with their TSA customer. 

b) Ensure that the requirements for all projects are defined, 

documented, and followed, so that program objectives are 

met in the most cost-effective manner. 

TSA Response: In the development of the TSOC, the urgency to 

complete the facility lessened the importance of defined, 

rationalized, and documented requirements. Since recognizing this 

deficiency, the Office of Acquisition has been working with 

program offices to develop performance-based requirements that 

meet the mission and provide for cost control, competitive 

processes, and access for socioeconomic programs. Also, TSA 

noted that, at the time of the TSOC’s development, Office of 

Acquisition business agreements lacked structure and thought 

Irregularities in the Development of the Transportation Security Operations Center Page 60 
Appendix B 

OIG Evaluation of Management Comments

______________________________________________________________________________________

processes based on years of acquisition experience. In addition, 

TSA’s acquisition function was obscured three layers deep in the 

Chief Financial Officer organization. TSA recognized that the 

Office of Acquisition could not coordinate TSA’s acquisition 

program or enforce acquisition policies and statutory law from that 

level. Therefore, in the fall of 2004, the office was elevated to the 

assistant administrator level. 

 

OIG Evaluation: The organizational move of the Office of 

Acquisition can have salutary consequences and the potential for 

improving the office’s coordination of procurements and oversight 

of policy and statutes. Based on the strengths of the Office of 

Acquisition initiatives, this recommendation is resolved, but will 

remain open until all corrective actions included in TSA’s response 

have been completed. 

Recommendation 2: Ensure that all contracting officers and

contracting officers’ technical representatives receive training

appropriate for those positions. 

TSA Response: TSA recognized that some acquisition challenges 

arose due to a lack of knowledge and understanding. To meet those 

challenges, in October 2003, the Office of Acquisition developed a 

series of workshops on key acquisition processes. The goal of the 

workshops was to address the knowledge gaps in key areas of 

acquisition policy and to share acquisition best practices. Nearly 

400 TSA employees have participated in these workshops. TSA 

has comprehensive requirements for its contracting officers and all 

contract specialist in the 1102 series. Warrant requirements for 

contracting officers are specified in DHS MD 0740.2. Training and 

warrants are issued in compliance with the MD. DHS’s Chief

Procurement Officer provides certification. In addition, the Office 

of Acquisition has been working with program managers to ensure 

that they are trained and certified in accordance with DHS 

standards established in Management Directive (MD) 0782. 

OIG Evaluation: The Office of Acquisition appears to have

established an aggressive approach to meeting the training needs of 

the acquisition staff as well as with the program offices that 

interact with the acquisition staff. This recommendation is 

resolved-closed. 

Recommendation 3: Review the physical security requirements 

for the TSOC/SOCD facility with the TSA security officer to 

Irregularities in the Development of the Transportation Security Operations Center Page 61 
Appendix B 

OIG Evaluation of Management Comments

______________________________________________________________________________________

determine security vulnerabilities and address corrective measures. 

In addition, TSA should establish processes to ensure that physical 

security concerns for all TSA locations are prioritized and 

addressed and that funding sources are clearly determined. 

TSA Response: DHS Office of Security has completed the 

installation of a complete security system at the TSOC. The 

building perimeter has been secured with reinforced fencing and all 

vehicle gates are protected against crash penetration. The TSOC is 

under full access control. 

OIG Evaluation: We acknowledge that security measures that 

were not in effect at the time of our fieldwork have since been 

implemented. Therefore, we have adjusted the report to reflect the 

change in the TSOC’s security posture and have withdrawn this 

recommendation. 

Recommendation 4: Recover the $83,313 overpayment to the 

tool company and such other sums for which it may have a legal 

remedy. 

TSA Response: TSA in coordination the Office of Counsel has 

initiated the process to recover the $83,313 overpayment to the tool 

company and any other overpayments. 

OIG Evaluation: This recommendation is resolved, but will 

remain open pending the recovery of the $83,313, as well as any 

other overpayments made to the tool company. 

Irregularities in the Development of the Transportation Security Operations Center Page 62 
Appendix C 

Recommendations 

______________________________________________________________________________________

Recommendations

We recommend that the TSA Assistant Secretary:

Recommendation 1: Follow TSA policy, as well as applicable 

federal regulations, when acquiring real estate and procuring goods 

and services. The policy and regulations establish procedures to 

help ensure that funding is spent prudently. Although following the 

procedures may increase the amount of time necessary to complete 

purchases, it will protect TSA from wasteful and abusive acts. 

Specifically, the TSA Assistant Secretary should: 

a) Ensure that TSA procurement personnel coordinate all 

procurements with their TSA customer. 

b) Ensure that the requirements for all projects are defined, 

documented, and followed, so that program objectives are 

met in the most cost-effective manner. 

Recommendation 2: Ensure that all contracting officers and 

contracting officers’ technical representatives receive training

appropriate for those positions. 

Recommendation 3: Recover the $83,313 overpayment to the tool 

company and such other sums for which it may have a legal 

remedy. 

Irregularities in the Development of the Transportation Security Operations Center Page 63 
Appendix D 

Major Contributors to the Report 

______________________________________________________________________________________

Carlton Mann, Chief Inspector, Department of Homeland Security, 

Office of Inspections and Special Reviews 

Aya Johnson, Inspector, Department of Homeland Security, Office 

of Inspections and Special Reviews 

Elizabeth Kingma, Inspector, Department of Homeland Security, 

Office of Inspections and Special Reviews 

Irregularities in the Development of the Transportation Security Operations Center Page 64 
Appendix E 

Report Distribution 

______________________________________________________________________________________

 Department of Homeland Security

The Honorable Michael Chertoff 

Secretary 

Office of General Counsel 

Mr. John Wood 

Chief of Staff 

The Honorable Randy Beardsworth 

Acting Under Secretary for Border and Transportation Security 

The Honorable Janet Hale 

Under Secretary for Management 

Mr. Gregory Rothwell 

Chief Procurement Officer 

Steve Pecinovsky 

Management OIG Liaison 

Brian Besanceney 

Assistant Secretary for Public Affairs

Office of Management and Budget

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress

Congressional Oversight and Appropriations Committees, as

appropriate

Irregularities in the Development of the Transportation Security Operations Center Page 65 
Additional Information and Copies 

To obtain additional copies of this report, call the Office of Inspector General 

(OIG) at (202) 254-4100, fax your request to (202) 254-4285, or visit the OIG 

web site at www.dhs.gov.

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 the OIG Hotline at 1-800-323-8603; or write to the 

Department of Homeland Security, Washington, DC 20528, Attn: Office of 

Inspector General, Investigations Division – Hotline. The OIG seeks to 

protect the identity of each writer and caller.