```

[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]

 
           STAKEHOLDER PERSPECTIVES ON TSA ACQUISITION REFORM

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                        TRANSPORTATION SECURITY

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 17, 2013

                               __________

                           Serial No. 113-26

                               __________

       Printed for the use of the Committee on Homeland Security
                                     

[GRAPHIC] [TIFF OMITTED] TONGRESS.#13

                                     

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                               __________

                     COMMITTEE ON HOMELAND SECURITY

                   Michael T. McCaul, Texas, Chairman
Lamar Smith, Texas                   Bennie G. Thompson, Mississippi
Peter T. King, New York              Loretta Sanchez, California
Mike Rogers, Alabama                 Sheila Jackson Lee, Texas
Paul C. Broun, Georgia               Yvette D. Clarke, New York
Candice S. Miller, Michigan, Vice    Brian Higgins, New York
    Chair                            Cedric L. Richmond, Louisiana
Patrick Meehan, Pennsylvania         William R. Keating, Massachusetts
Jeff Duncan, South Carolina          Ron Barber, Arizona
Tom Marino, Pennsylvania             Dondald M. Payne, Jr., New Jersey
Jason Chaffetz, Utah                 Beto O'Rourke, Texas
Steven M. Palazzo, Mississippi       Tulsi Gabbard, Hawaii
Lou Barletta, Pennsylvania           Filemon Vela, Texas
Chris Stewart, Utah                  Steven A. Horsford, Nevada
Richard Hudson, North Carolina       Eric Swalwell, California
Steve Daines, Montana
Susan W. Brooks, Indiana
Scott Perry, Pennsylvania
Mark Sanford, South Carolina
                       Greg Hill, Chief of Staff
          Michael Geffroy, Deputy Chief of Staff/Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                I. Lanier Avant, Minority Staff Director
                                 ------                                

                SUBCOMMITTEE ON TRANSPORTATION SECURITY

                Richard Hudson, North Carolina, Chairman
Mike Rogers, Alabama                 Cedric L. Richmond, Louisiana, 
Candice S. Miller, Michigan              Ranking Member
Lou Barletta, Pennsylvania           Sheila Jackson Lee, Texas
Susan W. Brooks, Indiana             Eric Swalwell, California
Michael T. McCaul, Texas (ex         Bennie G. Thompson, Mississippi 
    officio)                             (ex officio)
               Amanda Parikh, Subcommittee Staff Director
                    Dennis Terry, Subcommittee Clerk

                            C O N T E N T S

                              ----------                              
                                                                   Page

                               Statements

The Honorable Richard Hudson, a Representative in Congress From 
  the State of North Carolina, and Chairman, Subcommittee on 
  Transportation Security:
  Oral Statement.................................................     1
  Prepared Statement.............................................     3
The Honorable Cedric L. Richmond, a Representative in Congress 
  From the State of Louisiana, and Ranking Member, Subcommittee 
  on Transportation Security:
  Oral Statement.................................................     4
  Prepared Statement.............................................     5
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Ranking Member, Committee on 
  Homeland Security:
  Oral Statement.................................................     6
  Prepared Statement.............................................     7

                               Witnesses

Mr. Marc A. Pearl, President and CEO, Homeland Security & Defense 
  Business Council:
  Oral Statement.................................................     8
  Joint Prepared Statement.......................................    10
Ms. Shene Commodore, Government Contracts & Business Manager, 
  Intertek, Testifying on Behalf of the Security Industry 
  Association:
  Oral Statement.................................................    14
  Prepared Statement.............................................    16
Mr. Dolan P. Falconer, Jr., President and CEO, Scantech 
  Identification Beam Systems, LLC:
  Oral Statement.................................................    19
  Prepared Statement.............................................    20

           STAKEHOLDER PERSPECTIVES ON TSA ACQUISITION REFORM

                              ----------                              

                         Tuesday, July 17, 2013

             U.S. House of Representatives,
           Subcommittee on Transportation Security,
                            Committee on Homeland Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 311, Cannon House Office Building, Hon. Richard Hudson 
[Chairman of the subcommittee] presiding.
    Present: Representatives Hudson, Rogers, Brooks, Richmond, 
Jackson Lee, and Thompson.
    Mr. Hudson. The Committee on Homeland Security Subcommittee 
on Transportation Security will come to order. The subcommittee 
is meeting today to hear testimony from the private sector on 
TSA acquisition reform.
    I recognize myself for an opening statement.
    I would like to thank our witnesses for participating in 
the hearing today. We know your time is valuable and we look 
forward to hearing your testimony.
    It is no secret that the Transportation Security 
Administration has struggled with technology acquisition since 
the agency was established after the terrorist attacks on 9/11 
and it is fitting that today marks the seventh oversight 
hearing that the Transportation Security Subcommittee has held 
on TSA technology in the last 2 years alone.
    We have discussed these issues with dozens of stakeholders, 
TSA, Department of Homeland Security leadership, and subject 
matter experts at the Government Accountability Office, the DHS 
Office of Inspector General, and the Congressional Research 
Service. What we have seen is very concerning.
    For example, GAO and DHS IG have found through numerous 
studies that TSA is not effectively implementing Government 
best practices, such as establishing program baseline 
requirements and conducting comprehensive analysis before it 
acquires new security technologies. This has resulted in 
acquisitions that have failed to meet performance objectives 
and have wasted taxpayer dollars.
    Additionally, private industry has expressed concern that 
TSA does not accurately communicate mission needs, testing 
plans, and long-term investment plans, which makes it difficult 
for companies to invest their own money in research and 
development.
    With constructive input from these stakeholders as well as 
the Chairman and Ranking Members, I plan to introduce 
bipartisan legislation this week. Through a series of common-
sense reforms this bipartisan legislation would address a 
fundamental problem: TSA's broken acquisition process.
    We don't have to look far to know the process is broken: 
Millions of dollars' worth of screening equipment locked in 
warehouses; puffer machines deployed without adequate 
operational testing; AIT body scanners deployed without 
adequate privacy filters; companies with innovative products 
that can't successfully navigate TSA's acquisition process; and 
perhaps most detrimental of all, American taxpayers losing 
confidence in the TSA's ability to execute its mission.
    I appreciate the challenges that those at TSA face to 
address the evolving threats that terrorists pose and believe 
these incidents are not always the result of poor intentions at 
TSA or industry failures, but instead are the consequences of 
inadequate planning and a lack of transparency and 
accountability for significant decisions. While some 
improvements have been made at the Departmental level we simply 
cannot risk perpetuating these mistakes, which is why I believe 
legislation is needed to address this issue.
    It is my goal for legislation to focus on four specific 
areas of reform. No. 1, first it should require TSA to develop 
a multi-year technology acquisition plan with input from its 
stakeholders. This kind of planning will encourage industry 
investment and serve as a fundamental foundation for future 
technology acquisition programs. The private sector represents 
an incredibly valuable partner in security and strategic 
planning would strengthen that partnership tremendously.
    No. 2, it should require TSA to conduct comprehensive 
analysis for security-related technology acquisitions and 
provide key information to Congress throughout the acquisition 
process, including any cost overruns, delays, or technical 
failures. Legislation will need to include early warning so 
that Congress can see what is happening before critical 
failures and react to help protect the taxpayer.
    Third, it must require TSA to develop a system for 
effectively tracking and managing equipment in inventory. In 
May of this year the DHS IG reported that TSA does not have an 
inventory management process that systematically deploys 
equipment. The result is $185 million in equipment, including 
some unusable or obsolete equipment, locked up in warehouse 
storage units. This bill would help address this problem.
    Finally, any legislation must require TSA to develop an 
action plan for achieving previously established goals for 
contracting with small and disadvantaged businesses. Small 
businesses with innovative solutions are often unable to 
penetrate the bureaucratic and costly process of Government 
acquisition. The action plan required should introduce greater 
accountability for meeting small business goals, an area that 
TSA has agreed needs improvement.
    The bipartisan piece of legislation I intend to introduce 
is a reflection of the testimony, recommendations, and feedback 
from subject matter experts that the subcommittee has received 
thus far. I am eager to receive additional input from our panel 
of industry stakeholders today so that we can continue to 
strengthen and improve the bill as it moves through the 
legislative process.
    In addition, I continue to hope that Administrator Pistole 
will move toward a more risk-based, passenger-friendly future 
that protects our taxpayers' interest. We will continue to work 
on these issues with Mr. Pistole and his team while recognizing 
that TSA must comply with the Department of Homeland Security's 
policies and directives for acquisition management. In many 
cases our efforts are intended to codify existing DHS policies 
and directives, not supplant or duplicate them.
    Finally, I would like to personally acknowledge the work of 
my predecessor, the gentleman from Alabama, Mr. Rogers, for all 
of his insightful work on these issues and laying the 
groundwork for these bipartisan reforms as Chairman of this 
subcommittee during the 112th Congress.
    [The statement of Chairman Hudson follows:]

                  Statement of Chairman Richard Hudson
                             July 17, 2013

    It is no secret that the Transportation Security Administration, 
TSA, has struggled with technology acquisition since the agency was 
established after the terrorist attacks of 9/11, and it is fitting that 
today marks the seventh oversight hearing the Transportation Security 
Subcommittee has held on TSA technology in the last 2 years alone.
    We've discussed these issues with dozens of stakeholders, TSA and 
Department of Homeland Security leadership, and subject matter experts 
at the Government Accountability Office, the DHS Office of Inspector 
General, and the Congressional Research Service. What we've seen is 
very concerning.
    For example, GAO and the DHS IG have found, through numerous 
studies, that TSA is not effectively implementing Government best 
practices, such as establishing program baseline requirements and 
conducting comprehensive analyses, before it acquires new security 
technologies. This has resulted in acquisitions that have failed to 
meet performance objectives and have wasted taxpayer dollars.
    Additionally, private industry has expressed concern that TSA does 
not accurately communicate mission needs, testing plans, and long-term 
investment plans, which makes it difficult for companies to invest 
their own money in research and development.
    With constructive input from these stakeholders as well as the 
Chairman and Ranking Members, I plan to introduce bipartisan 
legislation this week.
    Through a series of common-sense reforms, this bipartisan 
legislation would address a fundamental problem--TSA's broken 
acquisition process. We don't have to look far to know the process is 
broken:
   Millions of dollars' worth of screening equipment locked up 
        in warehouses;
   Puffer machines deployed without adequate operational 
        testing;
   AIT body scanners deployed without adequate privacy filters;
   Companies with innovative products that can't successfully 
        navigate TSA's acquisition process;
   And perhaps most detrimental of all: American taxpayers 
        losing confidence in TSA's ability to execute its mission.
    I appreciate the challenges that those at TSA face to address the 
evolving threat that terrorists pose and believe these incidents are 
not always the result of poor intentions at TSA or industry failures, 
but instead are the consequences of inadequate planning, and a lack of 
transparency and accountability for significant decisions. While some 
improvements have been made at the Departmental level, we simply cannot 
risk perpetuating these mistakes, which is why I believe legislation is 
needed to address this issue.
    It is my goal for legislation to focus on four specific areas of 
reform.
    First, it should require TSA to develop a multi-year technology 
acquisition plan, with input from stakeholders. This kind of planning 
will encourage industry investment and serve as an important foundation 
for future technology acquisition programs. The private sector 
represents an incredibly valuable partner in security, and strategic 
planning would strengthen that partnership tremendously.
    Second, it should require TSA to conduct comprehensive analyses for 
security-related technology acquisitions and provide key information to 
Congress throughout the acquisition process, including any cost 
overruns, delays, or technical failures. Legislation will need to 
include early warning, so that Congress can see what's happening before 
critical failures and react to help protect the taxpayer.
    Third, it must require TSA to develop a system for effectively 
tracking and managing equipment in inventory. In May of this year, the 
DHS IG reported that TSA does not have an inventory management process 
that systematically deploys equipment. The result is $185 million 
dollars in equipment, including some unusable or obsolete equipment, 
locked up in warehouse storage units. This bill would help address this 
problem.
    Finally, any legislation must require TSA to develop an action plan 
for achieving previously established goals for contracting with small 
and disadvantaged businesses. Small businesses with innovative 
solutions are often unable to penetrate the bureaucratic and costly 
process of Government acquisition. The action plan required should 
introduce greater accountability for meeting small business goals, an 
area that TSA has agreed needs improvement.
    The bipartisan piece of legislation I intend to introduce is a 
reflection of the testimony, recommendations, and feedback from subject 
matter experts that the subcommittee has received thus far. I am eager 
to receive additional input from our panel of industry stakeholders 
today, so that we can continue to strengthen and improve the bill as it 
moves through the legislative process.
    In addition, I have confidence in Administrator Pistole's ability 
to lead TSA toward a more risk-based, passenger-friendly future that 
protects the taxpayer's interests. We will continue to work on these 
issues with Mr. Pistole and his team, while recognizing that TSA must 
comply with the Department of Homeland Security's policies and 
directives for acquisition management. In many cases our efforts are 
intended to codify existing DHS policies and directives, not supplant 
or duplicate them.
    Finally, I'd like to personally acknowledge the work of my 
predecessor, the gentleman from Alabama, Mr. Rogers, for all of his 
insightful work on these issues, and laying the groundwork for these 
bipartisan reforms as Chairman of this subcommittee during the 112th 
Congress.

    Mr. Hudson. With that, I now recognize the Ranking Member 
of the subcommittee, the gentleman from Louisiana, Mr. 
Richmond, for his opening statement.
    Mr. Richmond. Thank you, Mr. Chairman.
    Thank you to the Ranking Member of the full committee, who 
is the former Chairman, who also worked very diligently on 
this.
    Mr. Chairman, thank you for holding this important 
stakeholder hearing on TSA acquisition practices.
    Soliciting input from stakeholders is critical to 
developing effective policies. Over the past several months we 
have all emphasized this point to TSA time and time again. I am 
pleased today that we are practicing what we preach.
    Back in May we heard about the extensive challenges TSA 
continues to face in developing, acquiring, and deploying 
security-related technology. We also heard from TSA regarding 
the agency's failure to meet its small business contracting 
goals.
    Today we have an opportunity to move beyond focusing on 
past failings and to instead focus on how we can help get TSA 
on the right track.
    We all have the same goal. That is to ensure that TSA is a 
prudent steward of the taxpayer dollars as it fosters the 
development of new technologies that will support the agency's 
mission.
    To accomplish this, TSA must have a clear vision of its 
long-term technology needs. It must work with industry to make 
its vision a reality.
    In addition to better long-term planning, TSA would benefit 
from greater partnership with the innovative small businesses. 
Today, far too often we see promising homeland security 
technologies go undeveloped because the small business lacks 
the capital to undertake the expensive and time-consuming 
process of getting the technology tested. We should look at 
whether there are some best practices elsewhere in the Federal 
Government that could be employed here to address this major 
barrier to working with TSA.
    Broadly speaking, I look forward to hearing from each of 
the witnesses present today on ways they believe TSA's 
acquisition practices can be improved. Particularly, I look 
forward to hearing how improvements can be made that foster 
consistency and compliance with the Federal acquisition 
regulations and Department-wide directives.
    In TSA's short history we--we have seen, when it comes to 
administrative matters, be they personnel or procurement, TSA 
does not do novel well. That is why Congress acted to subject 
TSA to the Federal acquisition regulation in 2007.
    I do believe that technology acquisition by TSA is an area 
ripe for more robust transparency and accountability. 
Implementing such reforms would be beneficial for both 
stakeholders and taxpayers alike.
    Before yielding back, Mr. Chairman, I would like to commend 
you on the bipartisan approach you have taken to the issue of 
TSA acquisitions and potential reforms. Your willingness to 
address issues regarding TSA's lackluster performance as it 
relates to small business contracting is appreciated.
    Again, I want to thank all of the witnesses who are here 
today and I look forward to hearing your testimony.
    With that, Mr. Chairman, I yield back.
    [The statement of Ranking Member Richmond follows:]

             Statement of Ranking Member Cedric L. Richmond
                             July 17, 2013

    Thank you for holding this important stakeholder hearing on TSA's 
acquisition practices. Soliciting input from stakeholders is critical 
to developing effective policies. Over the past several months, we have 
all emphasized this point to TSA time and again. I am pleased that 
today we are practicing what we preach.
    Back in May, we heard about the extensive challenges TSA continues 
to face in developing, acquiring, and deploying security-related 
technology. We also heard from TSA regarding the agency's failure to 
meet its small business contracting goals. Today, we have the 
opportunity to move beyond focusing on past failings and to instead 
focus on how we can help get TSA on the right track.
    We all have the same goal. That is, to ensure that TSA is a prudent 
steward of the taxpayer dollars as it fosters the development of new 
technologies that will support the agency's mission. To accomplish 
this, TSA must have a clear vision of its long-term technology needs. 
It must work with industry to make its vision a reality.
    In addition to better long-term planning, TSA would benefit from 
greater partnership with innovative small businesses.
    Today, far too often we see promising homeland security 
technologies go undeveloped because small businesses often lack the 
capital to undertake the expensive and time-consuming process of 
getting the technology tested.
    We should look at whether there are some best practices elsewhere 
in the Federal Government that could be employed here to address this 
major barrier to working with TSA. Broadly speaking, I look forward to 
hearing from each of the witnesses present today on ways they believe 
TSA's acquisition practices can be improved.
    Particularly, I look forward to hearing how improvements can be 
made that foster consistency and compliance with Federal acquisition 
regulations and Department-wide directives.
    In TSA's short history, we've seen when it comes to administrative 
matters--be they personnel or procurement--TSA does not do ``novel'' 
well.
    That is why Congress acted to subject TSA to the Federal 
Acquisition Regulation in 2007. I do believe that technology 
acquisition by TSA is an area ripe for more robust transparency and 
accountability. Implementing such reforms will be beneficial for both 
stakeholders and taxpayers alike.
    Before yielding back Mr. Chairman, I would like to commend you on 
the bipartisan approach you have taken to the issue of TSA acquisitions 
and potential reforms. Your willingness to address issues regarding 
TSA's lackluster performance as it relates to small business 
contracting is appreciated.

    Mr. Hudson. I thank the gentleman. I thank you for your 
comments. I appreciate the relationship we have had working in 
a bipartisan way to move this forward.
    Also, in recognizing Ranking Minority Member of the full 
committee, the gentleman from Mississippi, Mr. Thompson, let me 
also say I appreciate our working relationship and your 
willingness to be a partner as we work to make these 
improvements.
    At this time, Mr. Thompson, I will recognize you for any 
statement you may have.
    Mr. Thompson. Thank you, Mr. Chairman.
    Thank the witnesses for appearing here today.
    Earlier this year the subcommittee continued its long-
standing tradition of conducting oversight of TSA's acquisition 
practices when it held a hearing with representatives from TSA, 
GAO, the DHS Inspector General, and the Department of Science 
and Technology Directorate. The testimony received at the 
hearing revealed that TSA continues to struggle to comply with 
Federal regulations and Department-wide directives when 
purchasing and deploying security-related technologies, does 
not monitor and effectively deploy its existing inventory of 
technology equipment, and comes up short when it comes to 
contracting with small businesses.
    Last year TSA spent $2.39 billion on goods and services. 
With billions of taxpayers' dollars being spent by TSA every 
year, the majority of which goes toward acquiring security-
related technologies, it is critical that every dollar be 
accounted for and used to address known and emerging security 
vulnerabilities.
    To accomplish that TSA must set forth the technological 
requirements for each acquisition, including what existing 
capability gaps would be addressed. While this may sound like a 
basic, common-sense task, it is one that, according to GAO, TSA 
has repeatedly failed to conduct.
    In fact, in 2009 GAO reported that TSA failed to conduct a 
cost-benefit analysis prior to purchasing and deploying over 
$100 million worth of AIT machines. Had TSA conducted such an 
analysis and considered privacy concerns, approximately $40 
million could have been saved. Certainly some of that money 
could have been put to far better use by supporting promising 
technologies developed by small businesses.
    Wisely spending taxpayers' dollars on security-related 
technologies also require a strategic vision. For too long TSA 
has allowed the most recent security incident to drive an often 
rushed effort to acquire and deploy new technologies. While the 
agency needs the flexibility to respond to emerging threats, 
such flexibility should not come at the expense of a long-term 
vision.
    I look forward to hearing from each of the witnesses about 
how they believe TSA's acquisition practices can be improved. 
Specifically, I am pleased that Mr. Falconer has joined us 
today. His experience, I think, will be enlightening for the 
Members of this committee.
    I look forward to hearing from him also on how TSA can 
improve its contracting performance as it relates to small 
businesses. Small businesses play a key role in both job 
creation and innovation. It is essential to both our economy 
and security posture for TSA to effectively partner with small 
businesses.
    Before closing, I would like to acknowledge the bipartisan 
approach the Chairman has taken to conducting oversight and 
drafting legislation addressing TSA's acquisitions challenges.
    Mr. Chairman, and I might add at this point that this whole 
acquisition situation has been an on-going, never-ending saga 
for those of us who have been on the committee a while, but 
especially people who do this for a living. At some point we 
are going to have to get our arms around it and just make it 
work and make it happen, and I look forward to your legislation 
as one of the opportunities for that to make it happen.
    With that, Mr. Chairman, I yield back the balance of my 
time.
    [The statement of Ranking Member Thompson follows:]

             Statement of Ranking Member Bennie G. Thompson
                             July 17, 2013

    Earlier this year, the subcommittee continued its long-standing 
tradition of conducting oversight of TSA's acquisition practices when 
it held a hearing with representatives from TSA, GAO, the DHS Inspector 
General, and the Department's Science and Technology Directorate.
    The testimony received at that hearing revealed that TSA continues 
to struggle to comply with Federal regulations and Department-wide 
directives when purchasing and deploying security-related technologies, 
does not monitor and effectively deploy its existing inventory of 
technology equipment, and comes up short, when it comes to contracting 
with small businesses.
    Last year, TSA spent $2.39 billion on goods and services. With 
billions of taxpayer dollars being spent by TSA every year, the 
majority of which go toward acquiring security-related technologies, it 
is critical that every dollar be accounted for and used to address 
known and emerging security vulnerabilities.
    To accomplish that, TSA must set forth the technological 
requirements for each acquisition; including what existing capability 
gap would be addressed. While this may sound like a basic, common-sense 
task, it is one that, according to GAO, TSA has repeatedly failed to 
conduct. In fact, in 2009, GAO reported that TSA failed to conduct a 
cost-benefit analysis prior to purchasing and deploying over $100 
million worth of AIT machines.
    Had TSA conducted such an analysis, and considered privacy 
concerns, approximately $40 million could have been saved. Certainly, 
some of that money could have been put to far better use by supporting 
promising technologies developed by small businesses.
    Wisely spending taxpayer dollars on security-related technologies 
also requires a strategic vision.
    For too long, TSA has allowed the most recent security incident to 
drive an often rushed effort to acquire and deploy new technologies. 
While the agency needs the flexibility to respond to emerging threats, 
such flexibility should not come at the expense of a long-term vision. 
I look forward to hearing from each of the witnesses about how they 
believe TSA's acquisition practices can be improved.
    Specifically, I am pleased that Mr. Falconer has joined us today. I 
look forward to hearing from him regarding how TSA can improve its 
contracting performance as it relates to small businesses. Small 
businesses play a key role in both job creation and innovation. It is 
essential to both our economy and security posture for TSA to 
effectively partner with small businesses.
    Before closing, I would like to acknowledge the bipartisan approach 
the Chairman has taken to conducting oversight and drafting legislation 
addressing TSA's acquisition challenges. I look forward to continuing 
to work with you to find ways to enhance TSA's performance in a manner 
that bolsters Department-wide acquisition reforms.

    Mr. Hudson. I thank you, Mr. Thompson, for your remarks.
    Other Members of the committee are reminded that opening 
statements may be submitted for the record.
    But we are pleased today to have a distinguished panel of 
witnesses with us.
    Mr. Marc Pearl has served as the president and CEO of the 
Homeland Security and Defense Business Council since 2008 and 
represents the policy interests of the leading large, mid-size, 
and small companies that provide homeland security technology, 
product, and service solutions to our Nation.
    Mr. Pearl previously served as general counsel and senior 
vice president of Government affairs at the Information 
Technology Association of America, and chief of staff and 
legislative counsel to former U.S. Representative Dan Glickman 
when the Congressman was Chairman of the House Intelligence 
Committee.
    We also have Ms. Shene Commodore, who is the Government 
contracts and business manager with Intertek Testing Services, 
where she leads the efforts in Government compliance and 
business development responsibilities. She is testifying on 
behalf of the Security Industry Association, the leading trade 
association for electronic and physical security solution 
providers.
    Ms. Commodore is a certified professional contract manager 
with over 20 years of experience providing acquisition support, 
contract management, proposal assistance, marketing, and 
financial auditing services to the Government and private 
sector. Her experience includes proposal preparation for 
General Services Administration, developing strategic 
partnerships, creating the negotiating contracts, business 
development, small business program development, and 
acquisition training services.
    Finally, Dr. Dolan Falconer is the co-founder and chief 
executive officer of ScanTech Holdings, LLC, an electron beam 
and X-ray technology small business. Dr. Falconer has 25 years 
of nuclear industry experience in the management of engineering 
projects for private industry and the Federal Government. Prior 
to co-founding ScanTech, Dr. Falconer co-founded and served as 
executive vice president of Parallax, an environmental and 
nuclear engineering company, where he was instrumental in 
growing the company from its start-up stage to having a 
National presence with over 150 engineers, scientists, and 
technicians.
    The witnesses' full written statements will appear in the 
record.
    The Chairman now recognizes Mr. Pearl to testify.

    STATEMENT OF MARC A. PEARL, PRESIDENT AND CEO, HOMELAND 
              SECURITY & DEFENSE BUSINESS COUNCIL

    Mr. Pearl. Thank you.
    Chairman Hudson, Ranking Member Richmond, Ranking Member 
Thompson, and Congressman Rogers, thank you for the opportunity 
for giving the Homeland Security and Defense Business Council 
an opportunity to discuss industry's perspectives on TSA 
acquisition reform. As a way of background, the council's 
mission is to encourage a collaborative dialogue between 
Government and industry, focusing on identifying the ways that 
we can better work together to address our Nation's critical 
homeland security needs, especially with regard to acquisition 
process and technology development.
    This subcommittee, as has been already stated, already 
knows that TSA acquisition programs represent billions of 
taxpayer dollars. Technology needs make up a significant part 
of that annual budget and plays a critical role in TSA's 
ability to accomplish its mission.
    Unfortunately, as GAO reports point out, many of DHS's and 
TSA's major acquisition programs often cost more than expected 
and take longer to deploy than planned and/or deliver less 
capability than promised.
    To address these issues, the council recommends: First, the 
continued use and development of open and transparent 
communication forums that allow for early and on-going two-way 
communication between industry and Government; and second, the 
development of a long-term strategic technology investment 
plan.
    First, with regard to communication. Early engagement with 
industry--early engagement--long before an RFI or an RFP is 
needed, so that DHS and TSA can conduct market research; study 
current technologies; understand what is possible, what is 
practical; learn industry terminology; and more, most 
importantly, define its requirements. Clearly-defined needs and 
concise requirements, particularly those that contain metrics, 
are critical factors in industry's ability to provide the 
Government, in a timely and cost-effective manner, with the 
technological capabilities that it needs.
    DHS and TSA recognize this and are working to find new ways 
to expand and deepen their engagement with industry. My written 
testimony provides a number of recommendations of how this 
progress can be continued into the future. Allow me an 
opportunity to just mention a few.
    They must continue to conduct face-to-face meetings and 
create forums that allow discussions on general technology 
needs and conceptual frameworks. They need to hold more, and 
more focused, smaller industry days to become less reliant on 
RFIs, which industry finds to be costly in terms of both time 
and dollars. Last, consider the increased use of draft RFPs as 
opposed to just putting forth an RFP.
    With regard to the strategic technology investment plan: 
DHS and TSA have made substantial progress in trying to 
communicate their future priorities, direction, and thinking to 
and with industry as a stakeholder. Strategic plans are a 
helpful start but the current plans do not address technology 
in depth. Congress should encourage them to take the planning 
process a few steps further and develop a mid- to long-term 
strategic technology investment plan.
    The council urges this subcommittee and TSA to look at, for 
example, NASA's 2012 strategic space technology investment plan 
as a possible template. The NASA plan is effective because it 
seeks to narrow the focus of the technology field and provides 
guidance on technology investments over the next 4 years with 
the context of a 20-year horizon.
    Please understand that a strategic technology investment 
plan is not a list of what the Government is going to buy in 
the future, but it is rather a flexible document that can be 
adapted if the risk profile dramatically changes. Most 
importantly, this kind of plan provides industry with a 
blueprint for the agency's future needs and thinking. It gives 
both Government and industry the time to plan appropriately by 
aligning financial and personnel resources towards addressing 
the highest priority needs, which is providing the foundation 
and a framework to achieve mission success.
    Even if only some of the measures that I have discussed 
today in both my oral and written testimony were to become part 
of the overall acquisition process, the council and its members 
strongly believes that they, together with the outreach efforts 
that are being carried out by DHS that is already taking place, 
will help TSA acquire the capabilities needed for mission 
success that are timely, cost-effective, and accountable, in a 
manner that encourages competition, innovation, and investment 
by industry in the homeland security enterprise.
    We very much appreciate the opportunity to provide the 
collective perspectives of industry on TSA acquisition reform 
and stand ready to answer any questions that you might have. 
Thank you.
    [The prepared statement of Mr. Pearl follows:]

                  Prepared Statement of Marc A. Pearl
                             July 17, 2013

    Chairman Hudson, Ranking Member Richmond, and distinguished Members 
of the subcommittee, I am Marc Pearl, president and CEO of the Homeland 
Security & Defense Business Council (Council), a non-partisan, non-
profit organization that is made up of the leading large, mid-tier, and 
small companies that provide homeland security and homeland defense 
technology, product, and service solutions to our Nation, and more 
specifically, as it relates to today's hearing, to TSA. We thank you 
for giving us the opportunity to appear before you today to discuss 
industry perspectives on TSA acquisition reform.
    The Council sponsors and promotes programs and initiatives that 
encourage a collaborative dialogue between industry and Government that 
focuses on identifying ways we can better work together to address our 
Nation's critical homeland security/homeland defense issues. Over the 
past few years, we have, for example, worked closely with the DHS 
Management and S&T Directorates on improving the acquisition process 
and the process for developing and finding advanced technologies.
    As the Members of this subcommittee already know, TSA acquisition 
programs represent billions of taxpayer dollars in life-cycle costs and 
support a wide range of aviation security missions and investments. 
Technology needs make up a significant part of TSA's annual budget and 
play a critical role in its ability to accomplish its mission. However, 
as Government Accountability Office (GAO) reports continue to point 
out, many of DHS and TSA's major acquisition programs often cost more 
than expected, take longer to deploy than planned, or deliver less 
capability than promised.
    Industry and Government are striving for the same goal--for TSA 
(and the entire homeland security enterprise) to acquire the 
capabilities needed for mission success through processes that are 
timely, cost-effective, accountable, and that encourage competition, 
innovation, and investment in the homeland security marketplace. No one 
can afford to have time, money, and resources wasted.
    Members of the Council firmly believe that open, transparent, and 
substantive communication, along with strong, on-going collaborations 
between the Government and industry long before and throughout the 
acquisition process is a critical aspect to achieving this goal and 
addressing the GAO's concerns.
    I do want to state unequivocally that DHS and TSA have truly begun 
to recognize this need, and are working hard to find creative and 
substantive ways to engage with industry--and not just with us in the 
role of contractor. We applaud their efforts and many of the recent 
changes that have occurred. In my testimony today, I would like to 
highlight some of the success stories and also suggest constructive 
ways that DHS, TSA, and Congress can continue the progress into the 
future.
    The Council believes the following actions will assist the process 
of acquisition reform and ensure that TSA has the ability to acquire 
innovative technologies in a cost-effective and efficient manner:
   The development of a long-term strategic technology 
        investment plan and multi-year budget plans; and
   Continued use and development of open and transparent 
        communication forums that allow for early and on-going two-way 
        communication between Government and industry.
    In particular, we believe that communication between Government and 
its industry partners can be improved through:
   Forums that allow for discussions surrounding general needs 
        and conceptual frameworks sufficiently in advance of an 
        upcoming program or contract;
   Smaller and more focused industry days;
   Less reliance on Requests for Information (RFIs);
   Increased use of draft Requests for Proposal (RFPs);
   Creation of an Acquisition Timeline Model and Acquisition 
        Status Dashboard; and
   Education of the TSA workforce on acceptable types of 
        Government/industry engagement.

 I. DEVELOPMENT OF A MID- TO LONG-TERM STRATEGIC TECHNOLOGY INVESTMENT 
                    PLAN AND MULTI-YEAR BUDGET PLANS

    The communication of the Government's future technology needs, 
vision, and intended direction is of critical importance to industry. 
It should also be of equal importance to legislators that are conscious 
of using tax dollars in an effective and efficient manner. Industry 
does not have limitless resources to devote to the development and 
testing of homeland security solutions. Particularly in the current 
economic environment, no one wants to waste time and money building 
speculative technologies or solutions that ``should'' or ``could'' be 
incorporated into--in this case--our Nation's transportation security 
efforts. In order to provide the solutions that TSA needs to 
operationalize its mission, industry must have advance notice of the 
need and an ability to provide long-range solutions to meet those 
needs.
    DHS and TSA have made substantial progress in trying to communicate 
future priorities, direction, and thinking to industry through the use 
of such vehicles as industry days, FedBizOps, and strategic planning 
documents. We applaud the development of the 2012-2016 DHS Strategic 
Plan and the 2013-2016 TSA Office of Security Capabilities Strategic 
Plan. We are particularly appreciative of TSA's willingness to have 
industry participate as a stakeholder in the planning process.
    While these documents are an important part of the planning 
process, they do not address technologies in depth. We strongly believe 
that DHS must take the planning process a few steps further and develop 
a mid- to long-term strategic technology investment plan.
    We point to the 2012 Strategic Space Technology Investment Plan\1\ 
that NASA issued as a good example. The NASA plan was created after the 
agency developed a series of technology roadmaps that defined its 
future needs based upon the results of a gap analysis. The plan is 
effective because it narrows the focus of the technology field and 
gives guidance on technology investment over the next 4 years, and 
within the context of a 20-year horizon.
---------------------------------------------------------------------------
    \1\ See http://www.nasa.gov/offices/oct/home/sstip.html.
---------------------------------------------------------------------------
    For purposes of demonstrating what we believe is a potentially 
useful template, and to assist the subcommittee in its deliberations, 
we have summarized below the component parts and type of information 
provided in NASA's plan:
   The technology roadmap specifies 14 plans for developing 
        technologies in 14 areas over the next 20 years.
   It prioritizes and divides its investment approach into 
        three levels of concentration.
     Core Technologies (70%).--These are the most pressing 
            near-term technology investments necessary to accomplish 
            its mission.
     Adjacent Technologies (20%).--These are additional high-
            priority investments that would be needed over the next 4 
            years. These are technologies that will take more time to 
            development.
     Complementary (10%).--These are the remaining needs from 
            the technology roadmap. They have limited immediate 
            relevance but they have the potential to bear relevance 
            over the next 20 years. These technologies may require some 
            investment now so that the capability will exist later.
   The core, adjacent, and complementary technologies support 
        goals in a four-pillar framework. Each pillar includes three 
        components: (1) A strategic investment goal; (2) associated 
        capability objectives; and (3) technical challenge areas 
        underpinning those objectives.
   The framework specifies the principles that will guide the 
        investment strategy and portfolio execution.
   It includes a governance approach with frequent oversight 
        and allows for the updating of the plan on a biennial basis.
    A strategic technology investment plan is not a list of what the 
Government is going to buy in the future. Instead, it is a flexible 
document that provides industry with a blueprint for the Government's 
future needs and thinking. It also gives both the agency and industry 
the time to plan appropriately by aligning financial and personnel 
resources towards addressing the highest-priority needs. Any assistance 
that Congress can provide in guiding the development of a long-term 
strategic technology investment plan would go a long way in providing 
the foundation and framework for all stakeholders to achieve mission 
success.
    While it is no doubt difficult to develop, particularly under the 
current budget approval process, Congress and DHS could work together 
more effectively to develop multi-year budget plans, or at least a 
credible forecast of future investment activities at the time of an 
annual budget justification. This would provide industry with a more 
predictable homeland security acquisition environment, and a greater 
level of certainty, which is needed to make multi-million dollar 
technology investments and hiring decisions.

II. CONTINUED USE AND DEVELOPMENT OF OPEN AND TRANSPARENT COMMUNICATION 
   METHODS AND FORUMS THAT ALLOW FOR EARLY AND ON-GOING INFORMATION 
                EXCHANGE BETWEEN GOVERNMENT AND INDUSTRY

    The Council has long stressed the need for the Government to engage 
with industry prior to starting the procurement process. Early 
engagement (long before the issuance of a RFP) is needed so that DHS 
can conduct the appropriate market research, explore creative ways of 
understanding existing and emerging technologies, learn industry 
terminology, identify all of the potential companies that can provide 
the technology, and determine the correct scope of the requirements 
that best fit the existing vendor base.
    Clearly-defined needs and concise requirements, particularly those 
that contain metrics and differentiators, are critical factors in 
industry's ability to provide the Government with the technological 
capabilities it needs in a timely and cost-effective manner. If the 
technical performance and testing requirements for technologies are not 
measureable or clearly communicated to industry, it raises the 
potential for an increased or lost cost of development, duplication of 
effort, and a resulting product or technology that fails to meet the 
Government's expectations. Industry input is essential to help define 
and calibrate requirements to match objectives and achieve goals. The 
more complex the procurement, the more critical the need for an open 
information exchange.
    DHS and TSA are working hard to conduct outreach to and collect 
intelligent data from industry. Currently, there are a number of 
methods used to gather and exchange information with industry, 
including Industry Days, RFIs, Broad Agency Announcements (BAAs), 
monthly webinars, FedBizOpps, DHS website announcements, one-on-one 
vendor sessions, and outreach through industry associations, like the 
Council.
    It is important that DHS continue to use multiple forums for 
communication. The Government needs to ensure it has forums that allow 
for both one-on-one and group engagement. The Government also needs to 
have the flexibility to balance group interactions so that it can have 
productive communications with a manageable amount of people, as well 
as the ability to reach out, request, and share information with a 
broader audience, particularly those who do not reside in Washington, 
DC. The latter is an important aspect to ensuring the Government is 
viewed as open and transparent.
    In this regard, the Council recommends six ways to expand and 
improve current communication efforts before and during the acquisition 
process:
    1. Develop Forums That Allow for Discussions Surrounding General 
Needs and Conceptual Frameworks Sufficiently in Advance of an Upcoming 
Program or Contract.--This type of interaction in advance of a specific 
procurement will enable the Government to gather the information needed 
to help shape the desired outcome, better define and understand what is 
actually needed, and determine what is economically reasonable and 
technologically feasible. Here is a simple analogy to drive this point: 
Without a conceptual discussion about what the Government needs 
technology to do for them, they may prematurely define the need as a 
mop or broom when what they really need is a Swiffer.
    2. Conduct Smaller and More Focused Industry Days.--Industry 
encourages the use of smaller and more focused industry days that 
include breakout sessions that allow for interactive roundtable 
discussions with the Government. These types of sessions are a more 
valuable use of industry's time and manpower. By narrowing the focus of 
an industry day, the Government can reduce the amount of people in 
physical attendance and allow for more productive and interactive 
engagement with the attendees. These sessions could be video-taped and 
live-streamed over the internet to ensure Government transparency. Many 
of the component parts of DHS, including TSA, have started to 
incorporate breakout sessions into their industry days, and industry 
reports they result in a better exchange of information.
    3. Less Reliance on Requests for Information (RFIs).--Recently, 
there has been a substantial increase in the use of RFIs to seek advice 
and information from the private sector before a RFP is issued. While 
RFIs are a valuable tool for communication when used in the appropriate 
circumstance, they also have limitations. Government should not rely 
too heavily on RFIs because industry is finding that they do not have 
the time, money, and manpower to devote to them. Simply put, it 
sometimes costs too much to provide a formal response, and it is 
industry's experience that many of the responses to RFIs often ``sit on 
the shelf'' and are not put to use.
    4. Increase the Use of Draft Requests for Proposal (RFPs).--
Industry believes the Government would improve the outcome of contracts 
if it increased the use of draft RFPs in advance of the final version. 
By issuing a draft RFP, industry has an opportunity to comment and 
raise issues that the Government should consider, particularly those 
that relate to the design of the contract, the interpretation and 
specificity of the requirements, the impact to industry, and potential 
problems with the RFP that might impact cost, competition, or delivery.
    5. Create an Acquisition Time Line Model and Acquisition Status 
Dashboard.--The current procurement process takes too long, resulting 
in increased costs and delays as well as causing detrimental impacts to 
the homeland security mission. Currently, it can take a year to a year 
and a half--often longer--from the time mission requirements are 
published until contracts are in place to begin addressing those 
requirements. We recommend that DHS establish an acquisition time line 
model and set of best practice benchmarks or service-level agreements, 
depending upon the appropriate terminology, by which it will execute 
acquisitions. DHS leadership would need to manage to those time lines 
and address and report any exceptions to those benchmarks.
    Another way of improving the communication process would be to 
develop a ``dashboard'' that shows industry the status of where the 
Government is in the acquisition process in relation to defined 
activities and milestones. This would save time and cut down on the 
amount of questions between industry and Government about where things 
stand in the process.
    6. Educate the Workforce on Acceptable Government/Industry 
Communication.--While there are numerous examples of Government 
employees that are diligently working to reach out to industry, this is 
not consistent across DHS or TSA. There have been a number of 
situations where certain employees will not meet with or communicate 
with industry due to fear that they are violating the Federal 
Acquisition Regulation (FAR) or other ethics rules. It would be highly 
beneficial for Congress to show its support and encouragement for 
continued and responsible engagement between industry and Government. 
We believe that more efforts to educate the DHS and TSA workforce on 
the timing and manner in which they can engage with industry would help 
address this problem.

     III. RECENT SUCCESS STORIES OF GOVERNMENT/INDUSTRY ENGAGEMENT

    It is important to point out to the subcommittee that there has 
been tremendous progress with regards to DHS and TSA's willingness to 
engage with industry and treat us as a valuable stakeholder in the 
overall process and mission. We have seen numerous examples of the 
Government engaging with industry outside of the acquisition process to 
vet ideas and concepts, challenge and support Government thinking, and 
provide valuable thought leadership. This interaction helps build and 
strengthen the partnership and will improve DHS' ability to accomplish 
its mission.
    Please allow me to share some of the most recent examples of how 
Government and industry have worked together to educate each other, 
share best practices and lessons learned, and change behaviors that 
occur during the acquisition process:
    1. Acquisition Risk Management Seminar.--This past March, the 
Council worked with the Management Directorate to host a 3-hour seminar 
before more than 50 DHS contracting officers, acquisition specialists, 
and program managers that focused on explaining how industry assesses 
and mitigates risk in the acquisition process. The seminar was an 
opportunity for Government to gain a better understanding of industry's 
perspectives, as well as to understand how risk mitigation decisions 
impact the bidding process and resulting outcome (in regards to cost, 
delivery, quality, competitiveness, effectiveness, and efficiency). TSA 
contracting officers took part in this seminar.
    2. Mock Post-Award Debriefing Exercises.--The Management 
Directorate has worked through a number of industry organizations to 
create Mock Post-Award Debriefing Exercises for DHS contracting 
officers. Subject matter experts from industry serve as role players 
and engage with Government under a variety of scenarios that might 
occur when the Government debriefs and furnishes the basis for 
selection decisions and contract awards. The overarching goal of the 
exercises is to help the Government learn to communicate the right 
information with industry during the debriefing process. TSA officials 
have taken part in these exercises.
    3. Input an Cost Estimation And Schedule Management Policies.--Last 
Spring, the Council worked with the Program Accountability and Risk 
Management (PARM) program within the DHS Management Directorate to set 
up a small practitioner work group made up of SMEs from Government and 
industry to review and provide input on draft standards for cost 
estimation and schedule management. The workgroup met twice to review 
the language and suggest ways to strengthen the policy to achieve 
intended objectives. The workgroup had valuable discussions about the 
interpretation and impact of certain sections of the guidance and to 
identify additional provisions that would be needed to ensure 
compliance. Industry representatives were able to offer examples, 
suggested language, and lessons learned based on their experience with 
similar policies at other Federal agencies.
    4. Input on the Technology Foraging Process.--Through a series of 
small group sessions, SMEs from a number of Council member companies 
met with representatives from the S&T Directorate to provide input on 
the technology foraging process. The goal was to share industry's 
experiences and suggest different ways that the Government could 
identify and evaluate existing or developing technologies that could 
support DHS mission needs.
    5. Government/Industry Focus Groups.--TSA has developed a set of 
focus groups with industry through the Washington Homeland Security 
Roundtable. These sessions have focused on identifying methods and 
processes by which TSA can effectively engage with industry on matters 
related to acquisition.

                               CONCLUSION

    We strongly believe that open, transparent, and substantive 
communication, along with continuous engagement between the Government 
and industry before and throughout the acquisition process is the key 
to reforming the acquisition process. DHS and TSA recognize the need 
and are succeeding in finding creative and unique ways of engaging with 
industry. While much progress has been made, we have identified a 
number of steps to continue the progress of acquisition reform into the 
future.
    We respectfully ask for your support in facilitating the following 
actions:
   Urge DHS overall and TSA in particular to develop a long-
        term strategic technology investment plan and multi-year budget 
        plans; and
   Encourage them to continue to use and develop open and 
        transparent communication forums that allow for early and on-
        going two-way communication between Government and industry.
    If these measures are built into the overall acquisition process, 
the Council and its members believe that TSA (and the entire homeland 
security enterprise) will acquire the capabilities needed for mission 
success in a manner that is timely, cost-effective, accountable, and 
that encourages competition, innovation, and investment in the homeland 
security marketplace.
    On behalf of the Homeland Security & Defense Business Council, I 
appreciate the opportunity to provide the collective perspectives of 
industry on TSA acquisition reform. The Council stands ready to answer 
any additional questions you may have on these important issues.

    Mr. Hudson. Thank you, Mr. Pearl.
    The Chair recognizes Ms. Commodore to testify.

 STATEMENT OF SHENE COMMODORE, GOVERNMENT CONTRACTS & BUSINESS 
    MANAGER, INTERTEK, TESTIFYING ON BEHALF OF THE SECURITY 
                      INDUSTRY ASSOCIATION

    Ms. Commodore. Good morning, Chairman Hudson, Ranking 
Member Richmond----
    Mr. Hudson. Is your button on there? You want to push the 
talk button?
    Ms. Commodore. Good morning, Chairman Hudson, Ranking 
Member Richmond, and distinguished Members of the subcommittee. 
Thank you very much for the opportunity to testify with you 
today regarding Transportation Security Administration's 
acquisition and procurement policies. My testimony today 
reflects over 20 years of experience in the area of Federal 
procurement, both from the Government and the private sectors, 
and that also includes TSA's procurement process during this 
time.
    I am here representing Intertek Testing Services. This is a 
Nationally-recognized testing laboratory whose history goes 
back to Thomas Edison. But I am also here representing the 
Security Industry Association, who has a membership of over 480 
companies which currently develop, install, and integrate many 
of the electronic security technologies in use by TSA today.
    Intertek is a member of Security Industry Association and I 
serve on the association's Government relations committee. It 
is truly an honor to be here with you today representing these 
two outstanding organizations.
    Specific to Intertek's role in the security industry, we 
test and certify products which help companies improve product 
performance, gain efficiencies in logistics and manufacturing, 
and also deter barriers to market. We also work with other 
organizations to create test procedures and methods which 
validate the compliance and validation of new technologies.
    The issue before us is procurement reform with TSA, and 
legislation that you have proposed, Chairman Hudson, is well 
received by the industry. As someone who works daily with the 
decisions made in Congress, the TSA, and several companies who 
sell directly to TSA, I can tell you that this is a welcome 
collaboration between Government and the industry.
    Open dialogue is even more critical to continue innovative 
growth in transportation technologies in order to protect our 
Nation with limited funds. The aging workforce, experience 
gaps, and the technology talent shortage are both global 
industry and Government problems.
    Contractors sometimes do not understand the requirements. 
Additionally, the lack of industry best practices on the 
Government side causes contracting staff to write unnecessary 
task or requirements in the solicitations, which then drive 
high acquisition costs. This can be prevented with more 
collaboration between industry and Government and also lead to 
additional Government savings.
    There are four key areas which I believe TSA should focus 
on to implement best practices in the procurement process. They 
are the acquisition planning, test and evaluation, cost-benefit 
analysis, and Government contract vehicles. While I will 
discuss these in limited detail now, my written testimony goes 
into greater detail.
    The first item: Acquisition planning. I will start off by 
saying there are three key phases to the Government contracting 
cycle: The pre-award phase, the award phase, and the post-award 
phase.
    The greatest risk in this cycle for all parties, industry 
and Government, is during the pre-award phase. It is, 
therefore, increasingly important that more acquisition 
planning takes place as early as possible.
    By communicating with industry, Government can learn best 
practices and gain a better understanding of the level of 
effort required for completing task. This is the opportunity to 
conduct market research prior to drafting requirements. 
Therefore, it is also my belief that TSA should conduct more 
requests for information and allow comments on draft 
solicitations.
    The next item: Test and evaluation. New initiatives should 
be established with TSA regarding testing and evaluation 
offices to contain costs so that we have verified equipment to 
market faster to maintain the on-going safety of our Nation's 
security. TSA should also limit testing requirements solely to 
labs that actually write the requirements, because equivalent 
testing can be done successfully through third-party 
laboratories.
    Regarding cost-benefit analysis, it is important that cost 
and benefits are measurable, accurate, realistic, timely, and 
beneficial. Contracting staff need to understand how to assess 
the realism of the cost in terms of the contract requirements.
    Last, Government contract vehicles. Government contract 
vehicles will afford TSA a streamlined procurement approach. 
Particularly with GSA, the contractors have already been 
verified and approved at discounted prices. This can also save 
TSA additional money.
    Again, thank you for the invitation for the committee 
today. On behalf of SIA and Intertek, we appreciate your 
efforts in this area and I look forward to answering any 
questions you may have.
    [The prepared statement of Ms. Commodore follows:]

                 Prepared Statement of Shene Commodore
                             July 17, 2013

    Good morning Chairman Hudson, Ranking Member Richmond, and 
distinguished Members of the subcommittee. Thank you for the 
opportunity to testify today about the Transportation Security 
Administration's (TSA) acquisition and procurement policies and 
practices.
    This morning my testimony reflects more than 20 years of experience 
in the area of Federal procurement and I have worked with TSA's 
procurement process since that agency was established a little more 
than 10 years ago.
    I am here representing not only Intertek Testing Services, a 
Nationally-recognized testing laboratory whose history goes back to the 
days of Thomas Edison, but also the Security Industry Association, 
whose more than 480 member companies develop, install, and integrate 
many of the electronic security technologies purchased and in use by 
the TSA. Intertek is a member of the Security Industry Association and 
I serve on the association's Government relations committee.
    It is truly an honor to sit here today, representing these two 
outstanding organizations.
    Specific to Intertek's role in the security industry, we test and 
certify products, help customers improve performance, gain efficiencies 
in manufacturing and logistics, overcome market constraints, and seek 
to help our customers reduce risk. Intertek also develops test 
procedures and methods to validate the compliance of the implementation 
of new technologies.
    As the industry leader with more than 35,000 people in 1,000 
locations in over 100 countries, we can ensure that products meet 
quality, health, environmental, safety, and social accountability 
standards for virtually any market around the world. Additionally, 
Intertek holds extensive global accreditations, recognitions, and 
agreement and we have extensive knowledge and expertise in how to 
overcome regulatory, market, and supply chain hurdles.
    The issue before us is procurement reform at the TSA. The 
legislation Chairman Hudson is proposing has been well-received by the 
industry. As someone who works daily with the decisions made in 
Congress, the TSA, and several companies who sell directly to the TSA, 
I can tell you that collaboration with industry is always welcomed.
    The aging workforce, experience gaps, and the technical talent 
shortage are global industry and Government problems. Additionally, 
since Congress has recognized the need for a professional acquisition 
workforce by establishing education, training, and experience 
requirements for entry into and advancement in the acquisition career 
fields for Federal agencies, industry collaboration and open dialogue 
is even more critical to continue innovative growth with transportation 
technologies in order to protect our Nation with limited funds. 
Contractors sometimes do not understand the requirements. Additionally, 
the lack of understanding of industry practices leads to Government 
contracting staff writing unnecessary tasks or tests requirements which 
drive high costs in the acquisition. This can be prevented with more 
collaboration between industry and Government and also lead to 
additional Government savings. We commend your efforts to encourage 
more communication and dialogue between Government and industry.
    There are Four Key Areas TSA should consider when implementing best 
practices to improve transparency with regard to technology acquisition 
programs:
    1. Acquisition Planning.--The Government contract cycle has three 
main phases; pre-award, award, and post-award. The pre-award cycle 
carries the most risks and is where acquisition planning takes place to 
identify requirements and associated costs with Government estimates. 
This is the opportunity to conduct market research and the best time to 
have discussions with industry, prior to drafting requirements. By 
communicating with industry, Government can learn best practices, 
common trends, and gain a better understanding of the level of effort 
required for completing tasks. TSA should conduct more requests for 
information, sources sought, and allow comments on the draft statement 
of work during the acquisition planning process. This will allow for a 
better acquisition plan that includes requirements that are both easy 
to understand and yield better pricing from prospective bidders. It is 
during this time that TSA can also identify small businesses that may 
be able to complete the work.
    2. Test and Evaluation.--New initiatives should be established with 
TSA testing and evaluation offices to contain costs and get products to 
market faster to maintain the on-going safety of our Nation's 
transportation system. Security products are needed for open-source and 
closed-source areas. The testing of products validates a product's 
safety and performance. Does the product function the way it is 
supposed to? Is it durable? Is it safe? Will it last? Testing and 
evaluation may include an assessment of a system, subsystem, or a 
component of a complete system. Additionally, the earlier testing 
begins in the process, the more chances for success of the product. 
Testing and evaluation should also include design review analysis, 
failure analysis, and corrosion analysis.
    Test standards are written to instruct engineers on how to conduct 
the proper test with specific test methods. Testing laboratories 
purchase test standards to stay abreast of required test methods. 
Accredited third-party testing laboratories like Intertek can test to 
various standards, although they did not write the test standard. It is 
important for contractors to know what information the agency would 
like to obtain from the test results and how the test data will be used 
in order to ensure the proper test method and how test equipment is 
part of the test evaluation process. In some instances, the agency 
requires test standards or specific test equipment where alternate test 
methods or test equipment can be used to provide the same information 
at different costs and time intervals. To ensure cost-effective, full 
and open competition, TSA should not limit testing requirements solely 
to companies that write the test standards, but include equivalent 
testing certification marks which are allowed to test to a variety of 
standards. By utilizing skilled testing laboratories other than those 
that have developed the test standards, it ensures the external 
validity (generalizability) of the test results. Product manufacturers 
and developers will be able to get their products tested and certified 
by more labs. TSA can then benefit from more thorough validation of 
security products to get these technologies to market faster.
    TSA recognizes the importance of getting products out faster and 
has released Request for Information (RFI), Solicitation Number: 
HSTS04-13-S-CT9999, Third-Party Testing to identify third-party testing 
facilities capable of providing testing and evaluation certification 
for Transportation Security Equipment (TSE). Original equipment 
manufacturers (OEMs) of security devices would have their equipment 
tested by commercial third-party testing organizations before they 
brought their equipment to TSA to undergo its more formal test and 
evaluation process. We believe this will streamline TSA's formal 
qualification process and increase the likelihood of security products' 
success and get them to market faster. TSA would also be able to gather 
data which can then be used for cost-benefit analysis.
    The formal TSA T&E process begins with entry into Developmental 
Testing (DT) where product system and subsystems are assessed for their 
ability to satisfy sought-after capabilities then assessed with Quality 
Testing (QT). By requiring third-party testing and certification, TSA 
can benefit from increased probability of quality security products 
being ready for an acquisition decision. Businesses will also save time 
and money because they are less likely to lose money retesting products 
and increase the likelihood of their products passing TSA testing 
requirements.
    Third-party testing certification would allow the TSA T&E workforce 
to save time therefore increasing their capacity to direct planning 
efforts. TSA's test and evaluation organization can then focus more on 
the operational test and system evaluation processes. These 
efficiencies will also yield TSA more oversight needed to meet its 
acquisition plan goals for security products by being able to provide 
more management attention to product quality issues that may face the 
greatest risks.
    3. Cost-Benefit Analysis.--Cost-benefit analysis is critical to 
budget planning and accurate forecasts of project cost estimates. In 
conducting cost-benefit analysis, one must be knowledgeable about cost 
realism and cost reasonableness. TSA procurement and program staff need 
specific, measureable, attainable, realistic, timely cost-benefit 
analysis guidelines for all major projects. Cost-benefit analysis 
guides should address the key elements of costs analysis, how to 
determine price reasonableness with emphasis placed on price analysis 
techniques and their appropriateness under a variety of contracting/
procurement scenarios. Acquisition staff must understand the difference 
between price analysis, cost analysis, and cost realism while also 
being able to identify cost reasonableness based on the requirements. 
It is important for those involved in acquisition planning and program 
management to understand the meaning of cost realism and cost 
reasonableness to generate and to develop more accurate independent 
Government costs estimates. In accordance with the Federal Acquisition 
Regulations (FAR) these terms are defined as the following:
Cost Realism Analysis (FAR 15.101, 15.401, and 15.404-1(d))
    Cost Realism Analysis is the process of independently reviewing and 
evaluating specific elements of each offeror's proposed cost estimate 
to determine whether the estimated proposed cost elements:
   Are realistic for the work to be performed;
   Reflect a clear understanding of contract requirements; and
   Are consistent with the unique methods of performances and 
        materials described in the offeror's technical proposal.
    Based on the offeror evaluation criteria stated in the 
solicitation, you can then use the results of your analysis in 
selecting the offer that provides best value to the Government.
Cost Reasonableness, FAR 31.201-3--Determining Reasonableness
    A cost is reasonable if, in its nature and amount, it does not 
exceed that which would be incurred by a prudent person in the conduct 
of competitive business. Costs cannot be deemed reasonable if they are 
not allowable.
    Cost-benefit analysis training should include detailed policy for 
all of these criteria so that Government staff have the ability to 
recognize unrealistic costs estimates. This will work to ensure the 
creation of more realistic project costs so that TSA can operate within 
budget. One common mistake among program and procurement staff is the 
lack of understanding of how the contract requirements affect the level 
of effort needed per tasks and related costs which can also be deterred 
with cost-benefit analysis procedures.
    It is imperative that cost-benefit data is maintained and reviewed 
on an on-going basis. To prevent cost-benefit data limitations because 
of the rapid change in technology; internal controls need to be 
implemented to maintain, compare, and reconcile the data compiled from 
annual forecasts and spending reports. Data should be maintained to 
review and prepare an analysis based on actual spending and comparative 
data to validate recommended acquisition program changes. The data will 
also help validate the success of acquisition planning and forecasting. 
Annual reports should include the identification of the staff which 
contribute to the report as well as the data source and methods of the 
data used. Each department should use the same methods to calculate 
cost benefit data to ensure a fair and consistent analysis throughout 
TSA with the use of reliable aggregate data.
    4. Government Contract Vehicles--TSA should also consider using GSA 
schedules. The General Services Administration reviews the technical 
ability, management, and financial solvency of companies that want to 
provide product and services to the Federal Government. Companies with 
GSA schedules have already been vetted and the best price has already 
been negotiated. This will save procurement lead time so that contracts 
can be awarded faster and TSA will receive discounted rates by 
qualified vendors. The following GSA Schedules could be beneficial to 
TSA:
   Schedule 70--General Purpose Commercial Information 
        Technology Equipment, Software, and Services;
   Schedule 84--Total Solutions for Law Enforcement, Security, 
        Facility Management Systems, Fire, Rescue, Special Purpose 
        Clothing, Marine Craft and Emergency/Disaster Response;
   Schedule 871--Professional Engineering Services;
   Schedule 66--Scientific Equipment and Services.
    Again, I would like to thank the committee for the invitation to be 
here today. On behalf of the Security Industry Association and 
Intertek, we appreciate your efforts in this area and I look forward to 
any questions you may have.

    Mr. Hudson. Thank you, Ms. Commodore.
    The Chairman now recognizes Dr. Falconer to testify.

    STATEMENT OF DOLAN P. FALCONER, JR., PRESIDENT AND CEO, 
           SCANTECH IDENTIFICATION BEAM SYSTEMS, LLC

    Mr. Falconer. Okay. Good morning, Mr. Chairman, Ranking 
Member, Ranking Member of the full committee, and distinguished 
Members of the subcommittee.
    My name is Dolan Falconer. I am founder, president, chief 
executive officer, and vial-washer for ScanTech. Thank you for 
inviting me to testify about my perspectives relative to TSA 
acquisition reform, specifically how TSA can better tap into 
the technology and innovations of small business.
    The facts are clear: Small and innovative high-tech 
companies have significant barriers to achieving qualification 
and contracts for security screening technologies. Simply put, 
it takes a long time, extensive resources, and a lot of capital 
to successfully do business with TSA.
    My company is based in Atlanta, Georgia and is 100 percent 
privately funded. We are the leading innovator in advanced 
technology X-ray systems. They are designed and designated 
under the trade name SENTINEL and our systems are designed to 
inspect carry-on luggage on aircraft.
    SENTINEL is designed to meet TSA requirements for all of 
the needs for the airline industry. We are currently one if not 
the only small business that is in the process of qualifying 
such a system within TSA.
    SENTINEL has been certified by Underwriters Laboratory and 
is currently at the TSA laboratory in the qualification 
process. Reaching this point is a major accomplishment for a 
small business and we are very proud that we have made it this 
far and we haven't taken a nickel of Government or public money 
to get here.
    That said, it has been a long and arduous process for us, 
which is par for small businesses within TSA. Let me explain 
this to you.
    We started the process in 2006 when TSA launched an effort 
to find a screening technology that would solve the problems 
with liquids on aircraft that we are all so familiar with. In 
response to this opportunity we submitted a white paper 
describing how we would solve the problem and address TSA's 
needs.
    We secured millions of dollars of private funding and began 
the process of developing test beds and building several 
prototypes in order to prove that we could do what we claimed 
we could do, and eventually we became one of seven companies 
selected by TSA to go into the qualification process for this 
program. At this point we began to really realize how difficult 
it would be to do business with TSA.
    It has taken us 7 years to get to this point, to the 
laboratory. But for a small business time is money. We have 
spent $20 million to get to this point, all private funding. We 
are not there yet. Time, more money, more time, more money. It 
is very difficult to solve the problem within TSA.
    At this point I was notified by our investors that they 
were getting tired of the time line, and they have since told 
us that they are looking at stopping funding because at the end 
of this process there is no assurance that you are going to get 
to a contract within the agency. That is okay for large 
businesses. Large, multi-billion dollar nationals do a lot of 
R&D. They have R&D budgets that they can move forward.
    But as a small business we cannot do that. We have to have 
an idea of where we are going. That currently does not exist 
within the agency.
    We made several recommendations in the areas that are 
problematic. One is privately-funded R&D. It should not be 
privately funded; there should be establishment of funding 
mechanisms to do the R&D phase.
    The requirement for Nationally-recognized third-party 
certification in our program, which is U.L. certification. Why 
would you get U.L. certification if the agency isn't going to 
say they are going to buy your machine? That is a lot of money 
and a lot of time.
    Full and open competitions. This is very difficult for 
small businesses. I am competing with the largest businesses in 
the world in this sector.
    Prior access to TSL. Without access you can't have the 
information to meet the standards, and so it is a very 
difficult process.
    Security requirements--everyone knows it is a Catch-22. 
Without a contract you can't get the security clearance; 
without the security clearance you can't get the contract.
    Finally, the unfunded qualification process, which is 
lengthy, takes forever to get through, and without funding you 
can't get there. So there is no funding support there.
    There are bright spots. I have had a meeting with 
Administrator Pistole. My recommendations were taken.
    We believe that TSL is doing an exceptional job under Dr. 
Susan Hallowell. She is an advocate. There is a readiness 
review process that is in place that is there to help us get 
through the qualification process, and I would like to give her 
thanks for that publicly.
    My written testimony includes a list of recommendations, 
and I stand here to answer those recommendations here to the 
committee.
    [The prepared statement of Mr. Falconer follows:]

                Prepared Statement of Dolan P. Falconer
                             July 17, 2013

    Good morning Mr. Chairman, Ranking Member, and distinguished 
Members of the subcommittee.
    My name is Dolan Falconer and I am the founder, president, and 
chief executive officer of ScanTech Identification Beam Systems. LLC.
    Thank you for inviting me to testify today about my perspectives on 
Transportation Security Administration (TSA) acquisition reform, and 
specifically how TSA procurement and acquisition practices can be 
improved to tap into the technology potential and innovations of U.S. 
small businesses.
    TSA faces particular challenges in obtaining the most effective and 
efficient security technology to protect the traveling public and our 
economy from evolving threats. Small and innovative high-technology 
companies face a gauntlet of barriers to achieving Government 
qualification and contracts for security screening technologies. Simply 
put, it takes a long time, extensive resources, and a lot of capital to 
successfully do business with TSA.

                               BACKGROUND

    Based in Atlanta, GA, ScanTech is a 100% privately-funded, U.S. 
small business and a leading innovator of Advanced Technology (AT) X-
ray inspection systems. ScanTech's X-ray inspection systems are 
specifically designed to provide materially better and faster detection 
of hazardous and contraband materials, thereby increasing processing 
efficiency resulting in reduced costs, increased confidence, and 
greater peace of mind for the traveling public.
    Designated under the trademark SentinelTM (see attached 
brochure), our systems are designed to specifically protect checkpoints 
and inspect airline carry-on baggage. While nearly identical in overall 
appearance to existing checkpoint scanners currently deployed at U.S. 
airports, SentinelTM systems are anything but the same when 
it comes to technology and capabilities. SentinelTM provides 
improved imaging, better spatial recognition, and advanced material 
discrimination algorithms to automatically differentiate and identify 
explosives, flammable liquids, and other hazardous materials and 
substances that may be hidden deep within screened baggage and 
packages.
    With a footprint very similar to traditional X-ray scanners, 
SentinelTM systems can quickly be installed and easily 
maintained at existing checkpoints without major infrastructure 
modifications. In addition, once installed, SentinelTM 
systems have built-in hardware and software upgrade capabilities that 
negate the need to replace the entire system as technology improves and 
threats evolve.
    SentinelTM is specifically designed to meet TSA 
requirements for the inspection of carry-on baggage, handbags, brief 
cases, laptop computers, small parcels, and packages that pass through 
airport checkpoints. Employing dual-energy, multi-view material 
discrimination with proprietary Automatic Threat Identification and 
Modular Threat Adaptation technology, SentinelTM provides a 
significant advantage and superior threat reduction over traditional 
and airport checkpoint X-ray systems.
    ScanTech is currently one of, if not the only U.S. small business 
in the process of qualifying such a system with TSA. 
SentinelTM has already been certified by Underwriter's 
Laboratory (UL) for Safety and Electromagnetic Compliance (EMC) and is 
currently at the TSA Transportation Safety Laboratory (TSL) in Atlantic 
City, New Jersey being prepared for the TSA AT Qualification Test.
    Although we consider reaching this point in the TSA acquisition 
process a major accomplishment, it has been a long and arduous process 
and is indicative of the challenges that face small technology 
businesses doing business with TSA.
    Please let me explain further.
    We began developing SentinelTM in 2006 when TSA launched 
a search for new screening technology for carry-on baggage that could 
detect threats like those that were to be used in an alleged plot to 
blow up as many as 10 planes in mid-flight from the United Kingdom to 
the United States using liquid explosive compounds brought on board in 
carry-on luggage.
    TSA invited interested companies to submit white papers for 
consideration, and in response, ScanTech initiated the development of 
SentinelTM, a four-plane platform architecture designed to 
address specific deficiencies in the then-current technology. After 
securing millions of dollars of private funding to support product 
development and design and to build and test several test beds and 
prototypes, ScanTech became one of seven companies and the only U.S. 
small business down-selected by TSA to enter its new AT X-ray 
qualification program.
    It was at this point that the realities of doing high-technology 
business with TSA as a U.S. small business and the challenges 
associated with navigating the TSA procurement process became apparent 
to me.

                       SMALL BUSINESS CHALLENGES

    Let me explain:
    Development of our next generation of X-ray screening technology 
began 7 long years ago and has taken over $20 million of private equity 
funding to reach this point. This is more time and money than most 
small businesses can sustain without Federal funding support.
    Several significant factors as described below combined to create a 
nearly insurmountable barrier of time and money for small businesses. 
Although these are specific to the technology channel we are pursuing 
within TSA, I believe they are indicative of the challenges facing most 
high-technology small businesses trying to do business with TSA:
    1. Privately-Funded R&D.--When TSA initially identified the AT X-
        ray acquisition requirement, no Federal funding was made 
        available to support R&D activities. As a result, all 
        ScanTech's R&D effort has been 100% privately funded. No 
        taxpayer dollars have been used. Unfortunately, most high-
        technology small businesses cannot secure sufficient private 
        equity funding to support years of R&D required to bring 
        products to the technology readiness level required by TSA to 
        acquire a product.
    2. Nationally Recognized Third-party Laboratory (NRTL) 
        Certification.--TSA required NRTL certification before 
        SentinelTM would be accepted for qualification 
        testing. As a result, SentinelTM was sent to the 
        Underwriter's Laboratory (UL) to meet the NRTL certification 
        requirement. NRTL certification prior to qualification testing 
        requires the investment of significant time and money before 
        confirmation that the technology meets TSA performance 
        standards and has a real path to eventual acquisition by TSA.
    3. Full and Open Competition.--The AT X-ray acquisition was a full 
        and open competition. A small business set-aside provision was 
        not included for ScanTech to compete for. In addition to having 
        to compete directly against large business for this procurement 
        opportunity, the acquisition also contained several 
        requirements that indirectly precluded small businesses from 
        participating even in the full and open competition. For 
        example, vendors were required to provide TSA with five systems 
        for evaluation and testing at the vendor's cost. Delivering 
        five systems to TSA requires a significant commitment of 
        capital that most small business cannot support.
    4. Prior Access To TSL.--Acceptance for qualification testing 
        required ScanTech to have access to data that could only be 
        acquired at TSL. As a result, small businesses must have access 
        to TSL prior to submitting a compliant data package for TSA 
        review and approval to proceed with qualification testing. 
        However, TSL is typically full with other mission elements that 
        take priority over scheduling small businesses for this data 
        collection.
    5. Security Requirements.--Acceptance for qualification testing 
        required ScanTech to have access to Sensitive Security 
        Information (SSI) and National Security Information (NSI). As 
        such, small businesses must invest both time and money in 
        securing the clearances necessary to participate in the 
        acquisition process, however, clearances are only granted to 
        parties with a contract providing a need-to-know.
    6. Unfunded Qualification Process.--The qualification process was 
        unfunded. ScanTech's investors have invested over $20 million 
        in reaching this point, but must commit even more private funds 
        to get through qualification. The Government should provide 
        funding assistance to small businesses that have taken a 
        technology to the point of qualification.

                             TSA COMMITMENT

    On July 19, 2012, I met with the TSA administrator and the 
assistant administrator for acquisitions to discuss these issues and 
their associated impact on small businesses and to share our lessons 
learned. During this meeting, we discussed the challenges associated 
with small businesses not having the advantage of access, familiarity, 
and previous contact with TSA technical staff. I emphasized the fact 
that small businesses, especially those that have no previous 
experience in dealing with Governmental procurement processes, are in 
need of technical procurement assistance, especially in the case of 
high-tech services or products, where knowledge of the processes and 
procedures can mean the difference between survival and success or 
failure. I presented the following recommendations following our 
meeting:
    1. Assign a subject matter expert to assist us and other small 
        businesses to quickly resolve technical questions and 
        requirements.
    2. Assign a contract officer's technical representative (COTR) 
        earlier in the process to assist us and other small businesses 
        navigate the technical procurement process.
    3. Conduct an advanced technical visit of our facility in Atlanta 
        by TSA technical management. TSA management had little or no 
        prior knowledge of ScanTech's technology or its capabilities 
        and an advanced visit would provide a baseline understanding of 
        our technology and its potential for addressing key threats and 
        vulnerabilities at the Nation's checkpoints.
    I am happy to announce that our recommendations were not ignored 
and have been implemented by TSA.

                   TRANSPORTATION SECURITY LABORATORY

    In December 2012, ScanTech signed a Cooperative Research and 
Development Agreement to enter TSL to access the explosive materials 
required to proceed with data collection and qualification of our 
SentinelTM system. TSL has established a Readiness 
Assistance Program that is structured to assist vendors understand and 
meet TSA technical standards and requirements and ScanTech has received 
significant readiness assistance in preparing for TSA qualification 
through this program.
    Readiness assistance is fully supported and endorsed by the TSL 
Director, Dr. Susan Hallowell. Dr. Hallowell is a leading advocate for 
high-technology small businesses and has worked hard to ensure that we 
are aware and informed of the requirements and processes necessary to 
successfully maneuver through the qualification process.
    Without Dr. Hallowell's stewardship and advocacy, we would still be 
years away from qualification. I personally commend her efforts and 
leadership in bringing small business innovation to the forefront of 
TSL's mission to identify and vet new technologies.

                       TOP THREE RECOMMENDATIONS

    Based on my experience from a small business perspective, I offer 
my top 3 recommendations for TSA acquisition process changes to bring 
more competition and innovation to the ever-evolving security market to 
effectively and efficiently address emerging threats to homeland 
security.

    1. Change the culture to foster accelerated innovation through 
        small business participation. Acquisition regulations and 
        requirements are complex, confusing, and constantly changing 
        which is a big disadvantage to small businesses and newcomers 
        to Government work.
    a. Elevate the role of the small-business advocate and define 
            specific and meaningful performance metrics (time- and 
            duration-oriented) that provide substantive benefits to 
            procuring and utilizing the best technology.
    b. Change the acquisitions process to foster timely, cost-
            efficient, and compliant qualification submittals, testing, 
            and proposals. Use parallel processes instead of sequential 
            processes. For example: Except for meeting the electrical 
            and radiation safety requirements, the other standards for 
            NRTL should be completed after accepted for testing at TSL. 
            Requiring the completion of all NRTL testing prior to 
            acceptance into TSL is a financial burden for a small 
            business and lengthens the process.
    c. Revise the existing processes to be more nimble and responsive 
            to industry innovations and concerns. A simplified process 
            would reduce the delay between initial White Paper and 
            Qualification Data Package (QDP) submittals and acceptance, 
            and laboratory tests to demonstrate the innovative aspects 
            of needed technology (e.g. liquids and gels kept in bags).
    d. Devise and mandate performance measures and incentives to align 
            the procurement and contracting process with objectives to 
            obtain and deploy the best technology in a faster, fairer 
            manner.
    2. Ease the entry-level requirements for promising technologies.
    Entry-level requirements are too high and rigorous to encourage the 
        development of new and promising technologies by small 
        businesses and newcomers to Government work.
    a. Amend the extensive and rigorous qualification and testing 
            process for new and innovative technologies to allow and 
            encourage small business participation and their ability to 
            fairly compete against large or global companies. For 
            example: Security clearances serve as a barrier to entry. 
            Clearances are not granted unless the company has an 
            existing contract. A small business with innovative 
            technology may not have on-going Government contracts. 
            Assist and facilitate small businesses in obtaining the 
            necessary DD254 and get individuals cleared in a timely 
            manner once the technology White Paper is approved, to 
            allow necessary access to procurement and technical 
            information.
    b. Add small-business and innovative technology set-asides for 
            technology procurement. The current passenger checkpoint 
            technology acquisition process is a Full/Open Competition 
            and does not provide a ``pre-investment model'' for small 
            business (i.e. includes requirements like a minimum of five 
            X-ray screening systems to gain entry into the program), 
            which requires significant finances and time. Small 
            business is unfairly expected to compete head-on with very 
            large, multi-billion dollar companies that have extensive 
            Government relationships and resources.
    c. Allow involvement by the relevant program experts, along with 
            the contracting officer, for availability to the submitting 
            business to address the multitude of questions relating to 
            technical, process, and submittal issues. This provides 
            more timely responses and expedites the process by getting 
            not just direction but clarification and understanding of 
            the requirements and why they were formulated. For example: 
            Data Collection: provide a clear path to acquiring the 
            necessary testing data needed to complete the QDP. Small 
            businesses and newcomers to Government procurement 
            typically only have access to simulant explosives, not real 
            threats/explosives. A solution to this is to have the CRADA 
            ``pre-approved'' upon acceptance of the White Paper, with a 
            testing slot guaranteed at the TSL. The qualified passenger 
            checkpoint Advanced Technology X-ray companies are all 
            large size, and have equipment deployed at TSL and TSIF.
    d. Minimum Base Unit Requirements: TSA defines various ``levels'' 
            of screening machines and associated requirements. The 
            base-level requirement has changed many times since 2009 
            and is constantly evolving with the lessons learned, future 
            considerations, and shifting threats. One section of the 
            TSA procurement specification lists an electronic diverter 
            for scanned bags as well as a bin return system. In 
            addition to the qualification requirements, a small 
            businesses are also expected to address logistics and 
            conveyors for acceptance into the TSL. The specification 
            should list ancillary equipment as ``optional'' 
            capabilities to preclude an unnecessary barrier to entry, 
            with the just X-ray unit the base requirement. Threat 
            detection is the germane requirement, not the bin return 
            system, etc. This is an expensive and time-consuming 
            requirement that is not necessary to assessing promising 
            technologies.
    3. Establish an effective small business engagement strategy. 
        Effective small business participation within the Federal 
        sector requires the full commitment and engagement of the 
        agency. Advocacy is a key component in all leading Government 
        small business utilization programs.
    a. Assign a Government ``Sherpa'' for small businesses that request 
            assistance to serve as an informed point of contact for 
            learning available Government resources.
    b. Establish a small business technology ombudsman that acts as a 
            problem finder and facilitator in navigating the 
            qualification, testing, and procurement processes and 
            requirements. For example: Most small businesses with new 
            and innovative solutions typically have no prior experience 
            or relationships within the specific TSA Programs and 
            Offices. To obtain information and get questions answered, 
            companies are not allowed to communicate directly with the 
            programs or lab, but are required to go through the 
            assigned Contracting Officer. This person is typically non-
            technical and not a subject-matter expert, and does not 
            have the background or experience to address the issues and 
            questions. Also, the questions and requests for information 
            must be submitted in writing, with no allowance for 
            personal communication or meetings with staff associated 
            with the technology. This requirement does not foster new 
            and innovative technology businesses; it serves the 
            incumbent and large Government contractors who have access 
            and relations. Technical representatives should be 
            available to provide technical advice and clarifications. 
            Small businesses should have direct access to the subject-
            matter experts to ensure that requirements and processes 
            are clearly understood.
    c. Obtain recommendations from relevant industry associations and 
            their small business membership related to acquisition 
            plans and procurement methods. Does TSA have an industry 
            advisory group for procurement recommendations? High-level 
            TSA executives should be connected to the group with an 
            objective to measurably simplify and streamline the 
            process, for meeting the TSA mission's objectives that are 
            being thwarted by procurement practices.

                                SUMMARY

    In summary, ScanTech offers a viable solution to one of TSA's most 
difficult technical challenges and we have found a way to navigate the 
arduous path before us, however, we still need your help! To date, we 
have been 100% privately funded. However, our private equity investors 
are now threatening to pull out, because of the uncertainty and time 
line associated with qualifying the technology for TSA acquisition and 
deployment. Small business funding in our sector would help ScanTech 
and other high-technology small businesses achieve success in TSA. 
Funding assistance would ensure that small business innovation is 
available to further strengthen TSA and its critical missions.

    Mr. Hudson. Thank you, Dr. Falconer.
    We appreciate you all being here and offering this 
testimony.
    I now recognize myself for 5 minutes to ask questions.
    We have heard over the last year or so that TSA is making 
progress and encouraging--or engaging with the private sector. 
However, it is one thing for TSA to listen to the private 
sector's concerns and recommendations and quite another to 
actually incorporate their feedback into a strategic 
acquisition plan.
    How confident are you--and I will open this up to any of 
the three--that TSA considers private-sector recommendations 
and concerns when planning for acquisitions?
    Dr. Falconer, you touched on that a little bit. I don't 
know if you want to start off?
    Mr. Falconer. You can legislate an agency to do something. 
On the ground it is a culture change.
    We hear a lot in the agency about, how can I take the risk 
of a small business, home-grown shops, of doing things? I will 
tell you, the rest of the Government has figured it out.
    DOD doesn't have a problem; DOE doesn't have the problem; 
NASA. They have effective small business programs. It is 
cultural. They understand that innovation comes from small 
business and they facilitate programmatically the process of 
getting that innovation to the playing field.
    So I think the legislation is great. Reform is a starting 
point. But without the full support of the agency you can't 
affect cultural change. It is cultural change.
    Mr. Hudson. Well, thank you.
    Anyone else want to----
    Ms. Commodore. Yes. I would like to add to that. I agree 
with you, but in addition to that I think it is increasingly 
important, considering the changes with the FAR and other 
regulations, it is also imperative as part of that culture that 
the acquisition staff is properly trained so that they will 
know how to implement the information, take that feedback that 
they have received from the industry, and turn that into useful 
information so that they can implement the necessary changes.
    Mr. Hudson. I appreciate that.
    Actually, Mr. Pearl, I guess I will direct to you, what do 
you think the value of having--you touched on this a little bit 
in your testimony, but the value of having a multi-year 
technology acquisition plan? Could you just maybe expound on 
that a little bit, why that is so important to the private 
sector?
    Mr. Pearl. Well, I think it is important not just to the 
private sector, Mr. Chairman, but it is important to the 
Congress, it is important to the administration, and it is 
important to the Nation. You cannot, for particularly in the 
area of technology deployment, you cannot do it always in just 
a real time and say, ``Okay, this is what we need today,'' and 
that is the end of either the funding or the plan. Congress is 
never going to give multi-year funding but they are going to, 
in essence, approve the concepts of planning, and that is why 
the acquisition kind of investment plan that we are talking 
about will give everyone an equal playing field on which they 
can develop, whether they are small business like Dr. Falconer 
is talking about or whether they are the large businesses who 
are bringing small businesses in.
    It is all about going to and understanding what the metrics 
are, what the needs are and requirements are in the long run. 
You cannot always be--and I think, you know, Mr. Thompson 
talked about it--you cannot continually be a reactive agency. 
You cannot be a reactive Nation to only what is happening 
today, particularly in the TSA arena.
    We need to look forward with regard to what our general 
disasters, incidents may be, whether it be bad people or 
whether it be explosives, and then build your long-range 
planning around that. So that--anything that gets us to this 
kind of long-range thinking is, I think, helpful to all the 
parties--not just industry, but to the Nation and to everyone 
in between.
    Ms. Commodore. May I add something to that, Mr. Chairman?
    Mr. Hudson. Sure.
    Ms. Commodore. The other advantage of the multi-year 
planning, especially in terms of adding a cost-benefit analysis 
factor to best practices, is so that you will have a baseline 
established so that you can at least also begin to compare the 
cost-benefit factors to that. That is increasingly important 
because you should be--we should be assessing cost, we should 
be assessing all the benefits, but we should also be assessing 
the economic tradeoffs that we are receiving and benefiting 
from the advancement in this technology.
    All of that should be documented, as well.
    Mr. Hudson. Well, thank you.
    I have got a lot more questions but I am running out of 
time, so if I am going to be fair and equitable to everyone on 
the committee I need to call myself as well.
    So at this point the Chairman now recognizes the Ranking 
Minority Member of the subcommittee, gentleman from Louisiana, 
Mr. Richmond, for any questions he may have.
    Mr. Richmond. Thank you, Mr. Chairman.
    Let me just start with, I think it is a quick question and 
it would probably be for Ms. Commodore and Mr. Pearl: Both of 
you all, I think, mentioned something that was close to 
identical, and my question is whether you all are thinking the 
same thing, one of which, I think, Ms. Commodore, you talked 
about pre-award acquisition planning and, Mr. Pearl, you talked 
about the draft RFP process.
    If done correctly they both accomplish the same goal that 
you all were mentioning, which is probably more communication 
in the beginning about what they need and communication from 
you all about--well, let me put it this way. They come out with 
theory and you come out with what happens in reality and how it 
really works and best ways to accomplish it. So that would be 
consistent?
    Ms. Commodore. That would be consistent. Also, to add to 
that, part of the problem when the requirements aren't clear is 
that we may, as industry in the testing, you know, laboratory, 
as an expert you may not benefit from our expert advice because 
we are only quoting and responding to what you asked instead of 
what we know as experts should be quoted. I mean, there are 
various different standards and subparts to that standards that 
require different things and give you different results.
    So the earlier that we are involved in the planning stage 
so that we can work with you collaboratively as a partner, 
helping you identify what kind of result you need and what 
works best, then yes, the better it is in the long run, as 
well.
    Mr. Pearl. Mr. Richmond, I would only say that one of the 
things that we have learned over the last few years in talking 
with the components and talking with folks even at the 
headquarters level and at the directorates is that the folks in 
Government know only what they know. They don't know what they 
don't know. If you only talk--and to be honest with you, if you 
only talk to individual companies--and there are many of the 
folks that go in technology and other components beyond TSA who 
have said to me, ``Oh, I talk to 200 companies a year''--well, 
if you are only getting the ear, whether it is of 10 companies, 
of 20 companies, or 200 companies, you are getting what their 
solution is and it may be a square peg going into a round hole.
    That is why earlier on in the process, where Government 
can, in essence, feel comfortable in communicating what its 
general ideas are holistically, then we are not building a 
square peg for what eventually becomes a round hole. We are, in 
fact, building together not as adversaries but as partners in a 
process that will lead to mission success.
    So, as I think Ms. Commodore said, as we have said, even 
long before the draft RFP, which is, ``We are going to do this 
program,'' when the germination of an idea is going, when we 
know what generally our general needs are, that is where you 
get market research and what the standards are and what the 
metrics might be so that everyone can be in lock step and we 
are not building waste--and spending wasteful dollars.
    Despite what Dr. Falconer says, large companies, mid-share 
companies, and small companies all together can no longer 
afford unlimited R&D projects. The basket ain't there anymore. 
We all have to work together to make sure that what we are 
working on research and development-wise is what the Nation 
needs.
    Mr. Richmond. Well, thank you. I am sure my office is 
laughing because you just cited the motto in our office, which 
is to know what you know, but more importantly, know what you 
don't know and find some people that do know it.
    Dr. Falconer, and Mr. Pearl just touched on the R&D aspect 
of it, and you talk about the fact that you all raised all this 
money and did all this research with no Federal assistance. I 
guess my question is: I know it would be beneficial, but there 
is no coordination in Department of Homeland Security or any of 
this--with the, for example, the SBI or a program that could 
actually give you all some help in terms of research and 
development funding or ability to do research and development?
    Mr. Falconer. Yes. There are initiatives that are going on 
and there is currently closer cooperation with SBI on our 
programs within the agency. They haven't gotten to the level of 
some of the other agencies that have done this for a long time. 
They are beginning to use it.
    They just came out with a BAA 13-05 in my sector. It is the 
beginning of a research and development process that was 
funded. It is not SBIR but it is similar. It is a research and 
development-funded thing by S&T, heavily coordinated with TSA 
to get to an end point, and there are some efforts going there.
    But a challenge for small businesses are that, you know, 
TSA is big business and the SBIR funding levels are not very 
large for what you are trying to get to within TSA, meaning 
screening equipment. Those are high-dollar efforts. So SBIR 
will get you a start, and there should be close collaboration 
between the administration and the SBIR sources.
    Mr. Richmond. Thank, Mr. Chairman. I see that I hit zero 
just now so I was as efficient as you possibly can be. So with 
that, I yield back.
    Mr. Hudson. Your timing is impeccable.
    The Chairman now recognizes the Ranking Member of the full 
committee, the gentleman from Mississippi, Mr. Thompson, for 
any questions he may have.
    Mr. Thompson. Thank you very much.
    As I indicated in my opening statement, we have talked 
about this for quite a while. You know, DOD, NASA, they have 
been at it a long time, and the notion that we have to reinvent 
the wheel just because we have a new agency boggles me, because 
by reinventing the wheel it absolutely costs taxpayers more. It 
disadvantages small business opportunity because you have to 
grow the model, and if you don't have the capacity or the 
resource base to grow the model you kind of languish at the 
bottom.
    So with your experience, Mr. Pearl and Ms. Commodore, would 
you see that as a reasonable suggestion for TSA more 
specifically to start looking at what others do rather than 
just trying to do it for you? You know, DOD--they buy a lot of 
screening stuff already, some which we couldn't get that on the 
domestic side but they had it in Iraq and Afghanistan deployed, 
but we couldn't get TSA to deploy the same equipment here.
    So what suggestions would you offer the committee to look 
at how other Federal agencies do it?
    Mr. Pearl. Well, I mean, I think that the question goes to 
a bigger answer than just the subcommittee's work, and we have 
talked about this with Chairman McCaul, we talked about it with 
you, we have talked about it with many Members of the committee 
in on-going dialogues over the years. Where you look to get 
best practices may even be in your home base, and part of the 
problem is is that not--the components don't always talk to one 
another. So that is--they wouldn't even have to go out to, you 
know, VA, or, you know, NASA or DOD; there are some best 
practices that are being observed that you may even have seen 
yourself in other subcommittee meetings and hearings where the 
processes of acquisition and procurement are being kind of 
pushed out.
    That is why we are encouraged in the close relationships 
and discussions and communications that we have conducted with 
the under secretary of management, with the under secretary of 
S&T, so the broader component of a kind of full, holistic 
approach to what is going on.
    I mean, I think--not to take anything away from the work of 
this subcommittee and what this bill may do, but if we only 
``solve the problem of TSA,'' we are playing Whac-a-Mole. You 
know, we are solving a problem here and four others may pop up.
    So what our overall arching concern is to make sure that 
the program assessment and risk management, PARM, is going 
forward, that the under secretary of management and the work 
that we have done trying to teach people how to--that a debrief 
is not about the protest but it is about how a business which 
didn't get the contract can do better the next time. So that is 
what we are trying to in essence work on so that the processes 
of all of the Department are, in fact, sharing information.
    Mr. Thompson. Thank you.
    Ms. Commodore.
    Ms. Commodore. What I would like to add to that, to also 
benchmark from the other agencies. For example, for small 
business goes to Department of Defense, they have them in 
protege programs. Even with DHS and the EAGLE program, which 
was for IT products and services, the acquisition staff really 
needs to sit down and work together and identify these larger 
contracts and the requirements and unbundle them and identify 
requirements that could be set aside specifically for small 
businesses.
    Mr. Thompson. Thank you. That has been suggested, by the 
way, from EAGLE 1 to EAGLE 2 and, you know, we just still 
suggest it.
    Dr. Falconer, from someone who has had a long-standing 
relationship with TSA, did you see the goalpost moved as you 
went along the way or was it clear from the beginning as a 
small business what standards and things you had to meet if you 
expected to do business in your area?
    Mr. Falconer. Unfortunately, you know, standards 
development was going on in parallel with my program, so the 
standards evolved as we continued to move towards the goal 
line, so it was never clear the end point. That is one of the 
problems of funding is that it is just a long time.
    So there are some ways that we can feed in our input into 
that standards development process by having subject matter 
experts come out into the field and basically come to small 
businesses, see the innovation, and then feed it back. They 
always go to the big guys and the big guys are stagnant.
    Innovation comes in small business. You feed it into the 
front of the standards development process. The standards 
develop faster, you are able to anchor a goalpost, and now I 
can kick the football through the goalpost. But I can't do it 
when the goalpost keeps moving around, and that is one of the 
major challenges to small business in this sector.
    Mr. Thompson. Thank you.
    Yield back.
    Mr. Hudson. Thank you, Mr. Thompson.
    The Chairman will now recognize other Members of the 
committee for questions they may wish to ask the witnesses. In 
accordance with our committee rules and practice I plan to 
recognize Members who were present at the start of the hearing 
by seniority on the subcommittee; those coming in later will be 
recognized in the order of their arrival.
    At this time I will recognize the gentleman from Alabama, 
Mr. Rogers, for any questions he may have.
    Mr. Rogers. Thank you, Mr. Chairman.
    Mr. Pearl, you made reference in your opening statement 
that you had three recommendations. One of them was to elevate 
the role of the small business advocate. So is it your view 
this SBIR is not achieving the goal of being a small business 
advocate within TSA?
    Mr. Pearl. I don't think that was in my testimony but we 
have spoken to it before. The whole issue of--and that is 
discussions that we have had with SBIR folks at S&T, as well, 
that we need to make sure that they are bringing everybody in, 
that mentoring programs are focused on, that in point of fact 
that we encourage greater involvement, given the capabilities. 
Not even the big businesses have the full capabilities that the 
companies like Dr. Falconer's has.
    So we are trying to figure out ways, both inside the DHS 
process and outside the process, where we can bring these folks 
together. We have had the person like Kevin Boshears in front 
of our group to talk about how we can better make those 
contracts towards partnership with the small businesses and, to 
be honest with you, with the mid-tier, as well. They are left 
out of the process, and so anybody who brings the capabilities 
and the solutions to the table need to be heard from.
    Mr. Rogers. In the last 2 years since this committee has 
been working with you have you seen more communication on an 
information basis from your membership with the Department 
procurement and acquisition personnel?
    Mr. Pearl. Absolutely. I mean, one of the things that I 
cite in our written testimony is, for example, we were asked by 
the Department--the Management Directorate--early this year to 
run a risk management acquisition life cycle seminar and we had 
about 50 or so program managers, contract officers not just 
from TSA, but TSA was there--from Secret Service, from CBP, 
from all of the component parts--coming together to kind of 
talk through what we in industry are going through so that they 
better understand the burden that we have in industry in terms 
of meeting the needs.
    Likewise, we have increased those kind of communications 
across the board. We are working on these mock debriefings so 
that the people that are running the debriefings understand 
what industry is going through--small, mid-tier, and large--
across the board.
    So I must tell you, under the leadership of the under 
secretary of management, Rafael Borras, and Dr. Nayak is the 
chief procurement officer, that communication and the message--
now, is it permeating all the way down to the components and 
every component equally? I would not say so. But that is what 
our goal is is to make sure that across the board that this 
whole process works better to everyone's----
    Mr. Rogers. Have they been, in these discussions, receptive 
to this concept of an informal RFP?
    Mr. Pearl. The draft RFP aspect is being discussed, and it 
has been utilized by some of the components thus far. This is 
not a brand new concept. When you jump right to the RFP and you 
can't change that and you bid on the way it is wired doesn't 
get you there, and so if you are not going to have a complete 
RFI process or an early pre-process that Ms. Commodore was 
talking about then at the very least let's have a draft RFP so 
that we can, in essence, provide and fine tune. Not to link it 
and not to have it driven by industry, but to say this is what 
industry can deliver if you just make these kinds of changes 
across the board.
    So we are--this is a concept, in response to today's 
hearing, that we checked out with our members and it was almost 
unanimous that this is a process that we should consider, and 
we will be talking with the Management Directorate about it.
    Mr. Rogers. Okay.
    Ms. Commodore, based on your knowledge, has TSA developed a 
cost-benefit analysis for major acquisitions?
    Ms. Commodore. Not one with all of the elements that I 
think need to be there to truly be able to assess all of the 
parameters now. And I----
    Mr. Rogers. Has your association been involved in these 
informal communications that Mr. Pearl has referenced with the 
TSA--
    Ms. Commodore. Yes. Several of our member companies have 
and I have. For example, in January there was an industry day 
for an RFI regarding third-party certification requirements for 
OEM, and that is a good example of a collaboration process 
early on to get requirements established.
    If I might add, I think, you know, reviewing and commenting 
on the draft solicitations and the RFI responses also go to 
provide additional validation with the multi-year planning, 
because, like Dr. Falconer here mentioned, the barriers to 
entry and the timeliness, you know, that small businesses need 
to get prepared and ramp up to being able to bid. So if there 
are active, you know, clear requirements with these multi-year 
plans that also allow small businesses to be able to assess the 
kind of certifications or clearances they might need so that 
when that time comes they will be able to bid.
    Mr. Rogers. Okay.
    My time is up, but, Dr. Falconer, when somebody does 
recognize you again I hope you will visit this topic. I 
understand there is $2 billion in DHS for grants--small 
business grants--across the entire agency, not just TSA. I 
would like for you to visit why you haven't been able to 
participate in that, whenever somebody gets a chance to 
recognize you.
    I am sorry I went over. Yield back.
    Mr. Hudson. I thank the gentleman.
    At this point I--Chairman will recognize the gentlelady 
from Indiana, Mrs. Brooks, for any questions she may have.
    Mrs. Brooks. Thank you, Mr. Chairman.
    I will yield a little bit of my time for Dr. Falconer to 
answer Congressman Rogers' question.
    Mr. Falconer. Great. Thank you.
    Yes, there has been an increase in grant-directed monies 
within DHS, and unfortunately, we have not received any of the 
grant money and where we are going. I don't know whether it is 
we are so mature now--grants are typically directed towards the 
R&D sector.
    We are beyond R&D; we are in an acquisition cycle. Our 
system is at TSL in the qualification process. It has its own 
set of challenges to maintain the capacity to go through the 
qualification process is where I am focused.
    We entered the program in 2006. At that point in time I 
don't think that grant structure was directed heavily towards 
TSA. If you go back and look at some of the metrics there were 
a lot of SBIR activity and some early BAA and looking at RFIs 
around this nuclear issue of inserting a nuclear weapon. That 
was DNDO and DHS, not specifically down to the TSA level, which 
is looking at air traffic--the airline business.
    Mrs. Brooks. Mr. Pearl, you mentioned in your testimony the 
Government shouldn't rely too heavily on RFI process because 
industry is finding they don't have the time, the money, the 
man power to devote to it. Do you have any sense, on average, 
how much it costs industry to submit an RFI? Have you heard 
from your members? I mean, what is----
    Mr. Pearl. I don't think there is a rule of thumb, 
Congresswoman, but I think that the concept is that it--this 
came through that if on a potential $10 million contract it 
could cost $1 million in pre-expenses, in terms of what is 
going on.
    The issue is not that it is costly, it is that since an--
what has happened is generally--and this is not just a TSA-
specific issue--is that what happens is that an RFI is put out 
there. We are requesting information. Please give us--for the 
general concept. The companies put together the plans and 
potentials and what is there and what they are asking for and 
then it sits.
    Mrs. Brooks. So----
    Mr. Pearl. Whether you are a small business or whether you 
are a mid-sized or a large, that may never turn into a 
contract----
    Mrs. Brooks. So are you saying, though, that TSA or the 
other agencies are not responding to the RFIs and are not 
commenting and critiquing them or asking follow up----
    Mr. Pearl. In some instances. I mean, that is why before we 
get even to the RFI process, if industry and Government can 
talk through--whether it is through these small, more focused 
industry days that we have been talking about or whether it is 
just through even webinars, and we have been talking to them 
about the--even at a time of sequestration when the monies are 
very tight you could, in essence, put on webinars so that you 
can reach out not just to the folks inside the beltway but to 
the folks that are in Atlanta or Idaho or wherever.
    So we are trying to work with them in developing creative 
ways, given the cost constraints.
    One of the things, I must tell you, that we talk about the 
benefit analysis--the idea of an ROI doesn't really exist 
within the Government, and so what we are trying to do is how 
do you bring the best business practices holistically into the 
Government so that you get a better return on your investment? 
That is part of our discussions with them, as well.
    Mrs. Brooks. Thank you.
    Ms. Commodore, would you like to comment on those 
opportunities and interaction--what is the most beneficial way?
    Ms. Commodore. I would just like to say that I haven't--and 
the companies that I usually deal with--haven't necessarily had 
the same experiences as Mr. Pearl have in--has had in terms of 
the requests for information. The clear distinction is that 
normally with requests for information one of the best 
practices that normally take place is there is some page 
limitation. It is a very simple format of, you know, giving 
some background about your company and how you might be able to 
fulfill your need--fulfill the need in the requirement, and 
just very brief. The plans aren't always required.
    But I will say, depending on the information that is 
requested in the RFI or the draft solicitation it could become 
a cost issue, but that is not always the case.
    Mrs. Brooks. Okay. Thank you.
    Dr. Falconer, you have, in your testimony you talked about 
the fact that when you met with TSA they have adopted some of 
your suggestions in the past, and your list of suggested 
changes, what would be at the top of your list at this point 
that you would like to see TSA or others adopt?
    Mr. Falconer. Unfortunately, they all combine together. 
There is really no top one. But if I had to pick one to work on 
first it is the issue with security clearances.
    Because of the nature of the information, unless you have a 
security clearance you can't understand the requirement. You 
can't understand the requirement, you can't propose a solution.
    But what happens is that we can't get the security 
clearance unless we have a contract, so in some kind of way 
there has to be a method in which to provide a security 
clearance without a contract. Maybe it is through the simple 
CRADA process--cooperative research and development process at 
the laboratory--which will serve as a basis for requesting 
security clearance so we can begin to see the classified 
requirements and then modify our developments and meet the need 
better for the agency.
    Mrs. Brooks. Thank you very much.
    I yield back.
    Mr. Hudson. Thank the gentlelady.
    At this point the Chairman will recognize the gentlelady 
from Texas, Ms. Jackson Lee, for any questions she may have.
    Ms. Jackson Lee. Let me thank the Chairman for this 
hearing, along with the Ranking Member. I think this is 
enormously important hearing and an important issue. Apologize 
for my delay. Had a hearing on FISA in the Judiciary Committee 
so I apologize, as well, for my departure.
    But having lived with these issues for a long time, Mr. 
Pearl, I think your insight, as I have gleaned from notes that 
I have been receiving, is enormously important. So I would like 
to get right to the issue of how do we fix this, because when 
we are, in our constituency, we hear of so many patriots who 
are interested in working with Homeland Security and also, not 
only interested but have particular, precise technology that I 
think is so important. When you look at the AIT machines, the 
new technology, we know we are ready for newer technology even 
though we have made a great progress from the antiquated 
beginning that we had some few years ago.
    But I have met with a number of individuals who want no 
special favors; all they want is to know what the particulars 
are and to be able to respond to it, and to also have the 
Department have a sensitivity to the vastness of talent and 
technology. So help me out in terms of what TSA can do to 
foster greater innovation as relates to security-related 
technologies. What precisely, if we were to close the hearing 
today and want to hand them a bill of particulars, if you will, 
what do we need to have in that bill of particulars for them to 
begin reforming their process?
    Mr. Pearl. Well, I mean, I have never been one to say, 
``Let's just jump and pass legislation,'' in part because we 
don't always get to go jump and pass legislation, in terms of 
the way the Congressional process works----
    Ms. Jackson Lee. It was a phrase of art. I was not talking 
about a bill.
    Mr. Pearl. No.
    Ms. Jackson Lee. If we were to hand them a list----
    Mr. Pearl. That is what I am responding to, because in some 
cases legislation is necessary. In some cases Congress can play 
a bully pulpit role, in terms of providing kind of guidance and 
encouraging the Department to build on what it has done 
already.
    Part of our discussion, both with this committee and the 
staff with the folks at the administration, has been a sense of 
really better understanding best practices and better 
understanding the lessons learned. I think that Mr. Thompson 
responded to that in a way to say, ``We don't want to 
continually try to reinvent the wheel.''
    So part of our process has been, No. 1, let's get industry 
at the table--not to drive the process but to inform the 
process. So the Office of Security Capabilities, which was just 
formed within TSA, has been having industry at the table. We 
have been working with the Management Directorate. We have 
seen, in many cases, the industry day with industry advisory 
councils, so that the process is already there.
    The encouraging aspect of what this subcommittee and what 
this Congress can do I think will continue. So the bill of 
particulars goes to what my testimony said. If early on in the 
process we can better inform, we can get to the issue of 
metrics and standards--if we can get to those points and 
understand and we are talking on the same kind of technology 
terminology and we don't continually just warehouse old 
potentially obsolete or unnecessary--industry doesn't benefit 
from that. Industry benefits when we stay ahead of the curve.
    So those kinds of things. Better communication. Do not look 
at--as industry as the adversary; look at industry as a 
partner, as a cooperative, collaborative partner in the process 
of meeting mission.
    Ms. Jackson Lee. Thank you.
    Ms. Commodore and Mr. Falconer, do you think we get a 
better product when industry is engaged? I am not sure whether 
the Security Industry Association, Ms. Commodore, that you are 
representing, includes small businesses, minority- and women-
owned businesses--I am not sure of your membership--but if you 
would say, No. 1, do we get a better product, meaning does the 
Nation get a better product because we have engaged? But 
secondarily, how do we get to those very small but technically 
sophisticated with a lot to offer women- and minority-owned 
businesses to Ms. Commodore and Mr. Falconer?
    Ms. Commodore. Real quick thinking. I would say initially 
that market assessment needs to be done where you are analyzing 
the businesses that the manufacturers that actually make these 
products so that you can assess who is--who is really out there 
qualified at this point that can do the work. Then do a further 
assessment with these additional vendors that are interested in 
doing the work but are not currently prepared.
    The next thing I would suggest, just as an example, 
currently with GSA the schedule 84 for police equipment and 
ballistics and hazard materials testing, there are 348 small 
businesses. So there is a start right there.
    Ms. Jackson Lee. I am sorry, schedule what?
    Ms. Commodore. Schedule 84.
    Ms. Jackson Lee. Thank you.
    Mr. Hudson. Thank the gentlelady.
    We will do a second round----
    Ms. Jackson Lee. Can I get Mr. Falconer to just answer the 
question?
    Mr. Hudson. Sure. Absolutely.
    Dr. Falconer, please go ahead?
    Mr. Falconer. I will be brief.
    I think it starts with the agency going outside the beltway 
and visiting the small business and innovative businesses, and 
looking and qualifying whether or not there is something there. 
If there is something there there is probably an intermediary 
step.
    Before you get to a lab it is maybe hiring a third-party 
test validation agency, getting one of the National labs to do 
this for you under contract, and then have a test bed that the 
small technology business can come in and do its thing and 
validate that it is real, and then provide a supported gateway 
into the laboratory, which is very busy, very crowded when you 
are talking about National security, and only take the products 
now where you have had some vetting.
    That whole process doesn't exist. What happens is is that 
currently you deal with the lab and the lab really doesn't have 
time. It is only dealing with the same three or four 
contractors it has always dealt with and that is a full-time 
job for them, so it is no way to get to the table in order to 
get that technical qualification, quantifying what you are 
doing in order to move forward to final product design.
    Ms. Jackson Lee. Thank you very much.
    I yield back. Thank the Chairman and Ranking Member.
    Mr. Hudson. Thank the gentlelady.
    Thank the witnesses.
    I will start the second round of questioning. I recognize 
myself for 5 minutes.
    I would like to go back to sort-of where I ended up my last 
question, where we were talking about the strategic acquisition 
plan and we talked about sort of the value of having that plan. 
But I would like to pose to the panel, what do you think should 
be included in such a plan? How would you structure? What is 
important that we have in that multi-year plan to make it 
successful?
    Ms. Commodore. Initially with acquisition planning there 
are also different steps to that. There are specific market 
research criteria that needs to take place. I think the 
additional steps that TSA could do besides the vendor lists 
that are currently there, are to talk to some of the trade 
associations and their members and find out, you know, what is 
currently going on and what the industry trends are for that.
    The next issue would be to evaluate how the services are 
actually priced in the market to get a more realistic view of 
how that can be done. A lot of times what happens in the 
acquisitions, businesses, depending on the contract type and 
the prices, they are assessing risk and they are making a 
decision as to whether they are going to bid or not. So that is 
the key requirement. That is the key thing that should 
already--also be in there in addition to a quality assessment 
surveillance plan that both parties can work from and be 
measured with.
    Mr. Hudson. Mr. Pearl.
    Mr. Pearl. Mr. Chairman, I absolutely agree on the better 
market research. I think that the requirements need to be clear 
and concise with metrics. If it is loosey-goosey, if it is not, 
if it is, you know, kind of amorphous, particularly in the area 
of technology. We have seen it in services where they have been 
more specific; we have seen it sometimes even in product, but 
in the area of technology it has been rather amorphous.
    Early on, and it goes back to what I have been saying and 
what we reiterate--if there are conceptual meetings that are 
held to better understand the capability the Government is 
trying to acquire, I mean, that is ahead of even the cost-
benefit analysis. That is ahead of the return on investment. It 
is, ``What mission are we trying to achieve? What are we trying 
to get out of this?''
    Then industry can then build to that as opposed to we 
think--and that is what a lot of companies have done, and I 
have seen that over the last 12 years. Companies say, ``I think 
that what the Government needs is this,'' and then Government 
doesn't know that it needs it, you know, and nothing goes.
    We have been working with Science and Technology to have a 
technology foraging process to try to move that out so that 
more companies beyond the beltway are part of the process. So 
small--again, small is absolutely essential. Small can be part 
of a small business contract; small can be part of a large 
business contract as a capable partner.
    We need to have them reach out to as many folks as possible 
who bring their requirements to the table.
    Mr. Hudson. Great.
    Dr. Falconer, would you like to----
    Mr. Falconer. Briefly.
    Trusted advisor, it is how the process has occurred. The 
Government doesn't really know; they go to the trusted advisor, 
who is usually an incumbent; an incumbent has spent millions--
hundreds of millions of dollars on a legacy platform. They want 
to reuse that platform, so all of their advice is around trying 
to reuse that platform.
    You don't have room for innovation to make it to the table 
because they are trusting that incumbent to give good direction 
and move forward with a new standard so the standard is built 
to the legacy platform whether it is better or not. There is no 
assessment of how good--it is not statistically, quantitatively 
determined that that adds value or causes a problem.
    Mr. Hudson. Thank you. That is extremely helpful.
    With the little time I have got left I wanted to go to this 
issue that Ms. Commodore brought up of third-party testing. I 
understand that it is common practice in private industry for 
third-party labs to test against standards they did not write. 
On the other hand, I understand the Federal Government prefers 
to contract with testing labs that draft the standards against 
which they will be testing.
    Can you explain--I will start with Ms. Commodore--the 
differences from your perspective?
    Ms. Commodore. The third-party testing laboratories have to 
be accredited, and in that accreditation the quality practices, 
the equipment, the staff--all of it has to be assessed. The 
additional benefit of this assessment and accreditation is that 
these labs are assessed by U.S. and international standards.
    None of these providers that conduct these audits on best 
practices and quality have any kind of manufactural control or 
managerial control over that assessment. So it also allows for 
a more objective review of the testing standards and the 
testing results.
    Also, just to add to that, currently the EPA actually has--
is using third-party certification for their Energy Star 
program, which includes over 40 different type of product 
types. The EPA has--they are using third-party certification in 
addition to some of the services for FAA. So it is taking 
place.
    Mr. Hudson. All right. Thank you for that.
    My time is expired.
    The Chairman will now recognize the Ranking Member of the 
subcommittee, the gentleman from Louisiana, Mr. Richmond, for 
any questions he may have.
    Mr. Richmond. Thank you, Mr. Chairman.
    Since we were talking about third-party testing, I guess 
one of the questions I had--do you think it would be 
beneficial--and, Ms. Commodore, you talked about it in life-
cycle cost estimates--do you think it would be beneficial to 
have third parties do that testing for the--while making the 
life-cycle cost estimates? I think the Coast Guard or some of 
the other agencies use that, so would you make that as a 
recommendation?
    Ms. Commodore. Yes, I would make that as a recommendation 
because part of the life-cycle cost analysis in the industry 
during the testing--that, to us, is accelerated life testing. 
Basically what we are doing is we are assessing the maintenance 
cost, the possible wear and tear on the item, when it is likely 
to tear and break at a specific time period.
    So it goes a long way in not just assessing, you know, the 
durability and the functionality of the equipment, but it also 
goes to help validate the cost related to that.
    Mr. Richmond. Mr. Falconer, you talked about I guess the 
challenges in attempting to access data from the Transportation 
Security Laboratory. I would like to ask you about the 
consequences of it but I would assume they are real 
consequences. Do you have a solution to the problem, or a 
recommendation?
    Mr. Falconer. Yes. It is in tiering. Everything in the lab 
isn't Classified, so if you could tier the CRADA so you can 
come in under a non-Classified CRADA first, get a little bit of 
the information, go through the process, have a basis for 
getting the security clearance, get it approved, that matches 
your progression to a product with the approval of TSA, and 
then you get your clearance and then you get a chance to go in 
and actually get to the Classified data and then continue your 
development process. I believe that is a workable solution 
around the constraints of trying to get to the actual 
analytical data that you need.
    The challenge for everyone is that some of the information 
and materials and things that you need to qualify your system, 
they are only available in National Laboratory or TSL settings; 
they are not available--I can't go to Walmart and pick it up 
and take it back to my lab and do it. I have to have access to 
that material, and that is the basic problem.
    Mr. Richmond. I guess this is just a little bit off 
subject, but I really appreciate the Chairman's hearing, and I 
really appreciate the conversation that we are having today. I 
guess my question would be: When you talk to TSA and you talk 
to DHS and you give them this advice or you have this 
conversation, what kind of feedback to you get, No. 1? No. 2, 
do you think they are receptive or you starting to see 
something happen that makes sense?
    Because we can talk about it here in theory all day long 
but if it is not moving something somewhere then we are wasting 
our time and we are wasting your time and neither one of us 
have much time to waste.
    Mr. Falconer. I would like to answer that first, briefly.
    It is simple for me. It is very difficult to compete 
against a large business that has billions of dollars available 
to do R&D. It has to, really for me to be successful, have a 
small business set-aside component that puts me on par from the 
start to get into the funding cycle.
    So it is simple for me to know where this works. I just 
look and see if there are any small business set-asides that 
are provisions coming out of the acquisitions.
    I can say that from--in my sector of what I do I have never 
seen one. It has never come out of my sector. Agency-wide, 
probably there has been some improvement in small business set-
aside constructed, and all of this is around debundling and 
working hard to structure the acquisitions so that you can 
bring not just small businesses--it is the innovation that you 
want--to the table. You need to bring it out into the public 
space.
    Ms. Commodore. I would just add to that, part of the 
challenge that we have had are the regulations--you know, the 
FAR has been around for quite some time and then in addition to 
that we have other related regulations that play a role in 
these solicitations. So it goes much deeper than that, because 
obviously, you know, businesses wouldn't be able to get any 
kind of regulatory revisions in enough time to be able to bid 
on a particular project.
    Mr. Richmond. Well, I would just say this in the remaining 
minutes that I have, and I think that it goes back to probably 
what my grandmother used to say, which is where there is a will 
there is a way, and I think the policy starts at the top, and 
if we can't get it through the administration then it has to 
come through this committee. So I really thank the Chairman for 
his demonstration and public display of support for a new 
procurement process and small businesses and really making the 
statement that we want to see some changes, we think there is a 
better, more common-sense way to do what you are doing, and we 
expect that you will find a way because we have the will to 
make it happen.
    So with that, Mr. Chairman, I just want to thank you for 
the legislation, thank you for the hearing, and thank the 
witnesses for their time.
    With that, I will yield back.
    Mr. Hudson. Well, I thank the gentleman, and I thank you 
for your comments. You know, it is very important to me that 
this be a bipartisan process, that, you know, we are looking 
for solutions. The American people sent us here to get 
solutions and so that is why it is important to me that we work 
together, put parties aside, put politics aside, and let's do 
what is best for the American people.
    I appreciate, Mr. Richmond, your working with me on this 
and the process, and let's hope we can get something done here. 
So thank you for that. Thank you for the comments.
    At this time I will recognize the gentlelady from Indiana, 
Mrs. Brooks, for any comments she may have.
    Mrs. Brooks. Thank you, Mr. Chairman.
    Mr. Hudson. Or questions.
    Mrs. Brooks. Quick question to Dr. Falconer, and maybe to 
the other panelists, because as you talk about what appears to 
be a pretty cumbersome and when you say not a process focused 
on ROI, I am concerned about that. I assume that many of the 
companies that all of you work with--and obviously you are here 
representing your own company--but other countries also have 
security processes, particularly with air travel, and I am 
curious whether or not other countries have far better 
processes than our country has and if you might share with us 
what some of your members or your own experiences with respect 
to other countries that have a more efficient and a even maybe 
as if not more scientific process--an innovative process to 
bring new technologies to their air travel.
    I don't know who would like to start off.
    Maybe Dr. Falconer, I don't know if you have dealt with any 
other countries?
    Mr. Falconer. Let me just pick one example. That is the 
European Civil Air Commission, which is the TSA of Europe. The 
process for qualification is about a year. Same class of 
systems that will go in their airports to do the same things in 
our airports.
    Our qualification system process is maybe three times that, 
maybe four--depends on where you are----
    Mrs. Brooks. So you are saying that to get the clearances 
you have talked about and to be able to bid and get involved it 
is about a year in Europe and 3 to 4 years here.
    Mr. Falconer. Yes. Much faster. They took a little more 
risk. Their process is very small business-friendly so they get 
the innovation component, and they do a lot of collaboration 
between the airline industry and the airport manager and the 
technology company, so there is some shared risk and earlier 
pilot deployments and collaboration to get the technology to 
the forefront faster. The lab process is a little bit shorter 
and they take a little more risk in different areas.
    I think there is a strong collaboration between TSA and 
ECAC at this point, and I think that some of that cross-
pollination is happening. They don't do everything right and we 
don't. We just want to share and find a collaborative way and 
merge some of the standards to get the same answer.
    Mrs. Brooks. That is what I wanted to--was just going to 
ask. So does the European Civil Air Commission work 
collaboratively with TSA and I wonder if there are any other 
countries or other areas of the world that your companies work 
with that have a better experience in working with Government 
on air travel?
    Mr. Pearl. I wouldn't necessarily say better, but 
different. In fact, I have been asked to speak at an airport 
security conference that is going to be in Prague in the fall, 
where there is going to be security officers from airports from 
all over the world.
    One of the problems has been, in point of fact, that I am 
one of the few industry people that has been invited to be 
participating. In essence, what we have seen in many instances 
is that Europe doesn't recognize the kind of trusted advisor 
role that industry can play; it is viewed as only as a 
contractor, and that the ministers of many of the countries do 
not--and this is not just TSA, this is at all levels of 
Homeland Security--don't always see that industry brings a 
sense of understanding, of knowledge, of best practices.
    So what we are trying to build into the model is what the 
council and other organizations are trying to do, which is if 
Europe and some of the third-world countries that are 
developing new airports--they are starting from the premise of 
security, not from technology. The question that you were just 
engaged in focused on, are they bringing the right 
technologies?
    Right now the issue should be, are they bringing in the 
concept of security into the discussion of whatever it is, 
whether it be maritime, whether it be aviation, whether it be 
mass transportation? To a certain extent, as they are 
developing new ways and modalities in the 21st Century they 
are, in fact, embedding the concept of security, and that is 
where it is been different, whereas in the United States we go 
begrudgingly, ``Oh, I have to bring security into the 
concept?''
    You know, and so what we are trying to change, so in 
essence, I am going over there to hear from them as much as 
they are going to be hearing from the way, in essence, we are 
doing it.
    Mrs. Brooks. Thank you.
    Ms. Commodore.
    Ms. Commodore. I would just like to add that yes, there 
is--Europe, as an example, even Australia--there is more of a 
collaborative effort that takes place. They also tend to, in 
some instances, in terms of best practices, have more detailed 
requirements and procedures into, you know, how those changes 
should be implemented and discussed.
    Mrs. Brooks. Thank you.
    My time is up and I thank you all for your ideas and for 
your passion for making this, you know, industry and the 
Government work in a much more collaborative approach. Thank 
you.
    Mr. Hudson. Thank the gentlelady.
    I thank our witnesses for your excellent testimony today 
and the Members for their questions.
    The Members of this committee may have some additional 
questions for the witnesses that we will ask you to respond to 
these in writing. Without objection, committee stands 
adjourned.
    [Whereupon, at 11:25 a.m., the subcommittee was adjourned.]

                                 
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