Aviation Security: Progress Made to Set Up Program Using Private-Sector Airport Screeners, but More Work Remains
Published: 2006-03-31T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In November 2004, as required by law, the Transportation Security Administration (TSA) began allowing all commercial airports to apply to use private screeners in lieu of federal screeners as part of its Screening Partnership Program (SPP). GAO's prior work found that airports and potential private screening contractors had concerns about the SPP, including whether they would be liable in the event of a terrorist attack and how roles and responsibilities would be divided among TSA airport staff and private screening contractors. This report addresses TSA's efforts to (1) provide liability protection to private screening contractors and airports and address other SPP stakeholder concerns; (2) achieve cost-savings through the SPP; and (3) establish performance goals and measures for the SPP.
section_title: What GAO Found
paragraphs: DHS and Congress have begun to address whether liability protection may be offered to current and prospective private screening contractors and airports using private screeners. DHS has already provided some liability protection to three of the four current private screening contractors. However, DHS officials stated that they cannot provide additional coverage, which would render contractors virtually immune from all pertinent claims, because TSA has not finalized performance standards that would allow DHS to determine if contractors will perform as intended--a criterion that must be satisfied before providing such additional protection. Recently enacted legislation shields airports from virtually all liability resulting from the negligence or wrongdoing committed by a private screening company or its employees. TSA has also taken action to improve the screener hiring process by granting contractors and TSA airport officials more input and flexibility in the hiring process. Additionally, TSA has defined the roles and responsibilities for SPP stakeholders--TSA airport staff and private screening contractors, among others--in its August 2005 SPP transition plan. However, the details in this plan have not been shared with private screening contractors, and all four contractors we interviewed were unclear about TSA staff roles and responsibilities at the airports they served. TSA has stated that the SPP will operate at a cost that is competitive with equivalent federal operations and will achieve cost-savings where possible. Over the last 3 years, TSA has awarded cost-reimbursement contracts with an award fee component for screening services at four of the five airports currently using private screeners. The award fee is based, in part, on contractor cost-savings. However, opportunities for TSA cost-savings may be limited because under the cost-reimbursement contracts TSA bears most of the cost risk--the risk of paying more than it expected. TSA plans to shift more cost risk to contractors by competitively awarding fixed-price-award fee contracts for screening services at the four smallest airports that will participate in the SPP. TSA also plans to competitively award fixed-price contracts for screening services at larger airports, but stated that they cannot do so for up to 2 years--when officials believe that screening costs at larger airports will be better known. TSA has developed performance goals and has begun drafting related measures and targets to assess the performance of private screening contractors under the SPP in the areas of security, customer service, costs, workforce management, and innovation. For example, one of the measures would require contractors to ensure that new hires receive required training. TSA's related target for this measure is that 100 percent of new hires will complete required training. These same measures and targets will also be used by DHS to assess whether to award full liability coverage under the SAFETY Act. TSA officials stated that DHS must approve the draft performance measures and targets before they can be finalized. As of January 2006, DHS had not yet completed its review.

section_title: Letter
paragraphs: The Aviation and Transportation Security Act (ATSA), enacted after the  terrorist attacks of 2001, required the federal government to take over the  job of screening airline passengers and their checked baggage from the  private sector. Among other things, ATSA further required that the  Transportation Security Administration (TSA) initiate a 2-year security  screening pilot program at up to five commercial U.S. airports. The  purpose of this pilot program, as defined by TSA, was to test the feasibility  of utilizing private-sector screeners to screen passengers and their  checked baggage in a post-9/11 environment, by allowing private-sector  screeners—hired and managed by private screening companies under  contract to TSA—to provide screening services in lieu of federal screeners  at selected airports, with TSA oversight. The pilot program ran from  November 2002 to November 2004. During that time, four private  screening contractors served the five pilot program airports (one  contractor served two airports).
In November 2004, as the private screener pilot program concluded, ATSA  required that TSA begin allowing all commercial airports to apply to TSA  to transition from a federal to a private screener workforce. To support  this effort, TSA created the Screening Partnership Program (SPP) to allow  all commercial airports an opportunity to apply to TSA for permission to  use qualified private screening contractors and private-sector screeners.  Currently, the four contractors that participated in the private screener  pilot program are under contract to TSA to provide screening services at  the five airports they have already been serving, and all five airports that  participated in the pilot program have applied and been accepted to  participate in the SPP. In February 2006, TSA competitively awarded a  new contract for screening services for one of the five pilot program  airports. Also, during the 16 months since the SPP was initiated, two  additional airports have applied to the SPP. TSA approved one of these  airport’s application and in December 2005 awarded a contract to a private  screening contractor—a contractor currently providing screening services  at two of the five pilot program airports—that enabled this airport to  transition from federal to private screeners in February 2006. The other  airport withdrew its application.
In November 2004, we reported on TSA’s preliminary efforts to allow  airports to apply to use private screening contractors to perform  passenger and checked baggage screening services through the SPP, and  how private screening contractors would compete to provide those  services. We reported that key stakeholders we interviewed—private  screening contractors, airport operators, and aviation associations—were  concerned about several aspects of the program. Specifically, stakeholders  expressed concerns about liability protection—whether and to what  extent private screening contractors and airports would be liable in the  event that threat objects or weapons were not detected at passenger  screening checkpoints or in checked baggage, leading to a terrorist  incident. At issue was whether the Support Anti-terrorism by Fostering  Effective Technologies Act of 2002 (the SAFETY Act) would offer private  screening contractors and airport operators federal protection from  potential lawsuits arising out of or resulting from aviation-related acts of  terrorism. These stakeholders also were concerned about the degree of  management control they would have over various aspects of screening  services, including how roles and responsibilities would be divided among  Federal Security Directors (FSD) and their staff and private screening  contractor managers and staff.
In this report, we address (1) TSA’s and the Department of Homeland  Security’s efforts to determine whether and how liability protection will be  provided to private screening contractors and airports that participate in  the SPP, and actions taken on other stakeholder concerns related to  participation in the SPP; (2) how TSA has determined it will achieve cost- savings goals for screener operations through the SPP, specifically with  respect to the choice of contract used, and contract terms; and (3) TSA’s  progress in developing and implementing performance goals, measures,  and targets to assess the performance of the private screening contractors  who will participate in the SPP.
To satisfy our objectives, we analyzed documentation related to TSA’s SPP  and the 2-year private screener pilot program that preceded the SPP and  interviewed various officials. Specifically, we interviewed 24 federal  aviation officials within the Department of Homeland Security (DHS) and  TSA, including FSDs at seven airports (the five pilot program airports and  two airports that applied to participate in the SPP, namely, Elko Regional  Airport in Elko, Nevada, and Sioux Falls Regional Airport in Sioux Falls,  South Dakota); airport operators at all five airports with private screeners  and the private screening contractors at these airports; officials with the  two airports that have applied to participate in the SPP; officials with two  aviation associations that represent hundreds of airports, including many  large commercial airports; and a major liability insurance provider. To  determine how TSA responded to stakeholder concerns about liability  protection and other issues related to participation in the SPP, we  reviewed SPP program guidance developed for airports, the SAFETY Act,  and related documents obtained from DHS. Additionally, we reviewed  ATSA provisions related to the SPP and our related reports, and  interviewed DHS officials about the SAFETY Act’s applicability to the SPP.  To assess the status of TSA’s efforts to achieve cost-savings in screener  operations through the SPP, we reviewed the contracts and pilot program  extension contracts TSA executed with the current private screening  contractors, TSA’s contracting policies and guidance, and the Federal  Acquisition Regulation. We also reviewed an independent consultant’s  study prepared for TSA that evaluated the costs of screening at 15 airports,  including all 5 pilot program airports. In addition, we interviewed TSA  officials about their choice of contract type to award for the SPP. To  assess TSA’s progress in developing and implementing performance goals  and measures to assess the performance of the private screening  contractors that participate in the SPP, we reviewed TSA’s draft  performance quality assurance surveillance and award fee plan for the  SPP. We also reviewed our work on the Government Performance and  Results Act (GPRA) and on TSA’s private sector screening pilot program  and its efforts to implement the SPP. We also interviewed TSA officials  about their efforts to develop performance goals, measures, and targets for  the SPP. Additional information on our scope and methodology is  contained in appendix I.
We conducted our work from March 2005 through March 2006 in  accordance with generally accepted government auditing standards.
subsections: section_title: Background
subsections: section_title: Statutory Provisions Related to SPP
paragraphs: ATSA was enacted on November 19, 2001, in response to the September  11, 2001, terrorist attacks. ATSA established the TSA and charged it with  responsibility for strengthening security in all modes of transportation,  including aviation. One of the most significant changes mandated by ATSA  was the shift from the use of private-sector screeners to perform airport  screening operations to the use of federal screeners. Prior to ATSA,  passenger and checked baggage screening had been performed by private  screening companies under contract to airlines. ATSA required TSA to  create a federal workforce to assume the job of conducting passenger and  checked baggage screening at commercial airports. The federal workforce  was to be in place by November 2002. At the same time, ATSA mandated  that TSA establish a 2-year pilot program using qualified private screening  companies to screen passengers and checked baggage, with TSA  oversight. Pursuant to section 108 of ATSA, TSA selected five airports,  one from each airport security category, to participate in the pilot  program. TSA also competitively selected four contractors (one  contractor serves two airports) to conduct screening at the pilot airports.  Table 1 lists the airports and private screening contractors that  participated in the pilot program.
Section 108 further permitted the more than 400 commercial airports using  federal passenger and checked baggage screeners to apply to TSA to use  private rather than federal screeners at the conclusion of the pilot.  Beginning on November 19, 2004, all commercial airports with federal  security screening became eligible to apply to opt-out of using federal  screeners through the newly established SPP. An airport operator may  submit to TSA an application to have the screening of passengers and  checked baggage at an airport be carried out by the screening personnel of  a qualified private screening company, under a contract entered into  between the private screening contractor and TSA. In addition to assessing  airport applications for using private screeners, as part of the SPP, TSA  plans to select qualified private screening companies that apply and meet  ATSA and TSA requirements to conduct screening, including airports that  seek to apply to serve as the private screening contractor.
The five airports selected to participate in the pilot program have applied  and been accepted to the SPP. TSA awarded, on a non-competitive basis,  new extension contracts (that replaced the original pilot program  contracts) to the incumbent private screening contractors at the five pilot  program airports effective November 19, 2004. The contracts enable the  four private screening contractors to continue performing screening  operations through May 18, 2006. As in the original pilot program  contracts, the new contracts require private screening contractors to  adhere to several ATSA provisions, including that:  the level of screening services and protection provided at the airport  under the contract will be equal to or greater than the level that would  be provided at the airport by federal government personnel;  the private screening company be owned and controlled by a citizen of  the United States;  the private screening company, at a minimum, meet employment  standards, compensation and benefits rates, and performance  requirements that apply to federal screeners; and    all private screener candidates meet the same minimum qualifications  as federal screeners, including U.S. citizenship (or being a national of  the United States), high school diploma or equivalent, English  proficiency, and pass a criminal background check.
TSA will make the final decision to approve any application submitted for  participation in the SPP and reserves the right to consider airport specific  threat intelligence and an airport’s record of compliance with security  regulations and security requirements to determine the timing of any  transition to private screening. TSA may also impose a delay on when an  airport can transition to private screening based on such factors as peak  travel season and the total cost of providing screening services at an  airport.
section_title: Applicants to the SPP as of January 2006
paragraphs: During the period November 2004 through January 2006, 7 out of the more  than 400 commercial airports had applied to participate in the SPP. In  addition to the five airports that participated in the pilot program, as of  January 30, 2006, two additional airports that did not participate in the  pilot program had applied to use private screeners—Elko Regional Airport  in Nevada and Sioux Falls Regional Airport in South Dakota. However,  after discussions with TSA officials, Elko Regional Airport submitted a  letter to TSA on September 30, 2005, seeking to withdraw its application  on the grounds that the City of Elko could not qualify as a private  screening company, thereby mooting its intention that the airport would  serve as the contractor. On October 17, 2005, TSA replied back to Elko,  acknowledging Elko’s withdrawal of its application to participate in the  SPP. Table 2 provides information on the two airports that applied to the  SPP, as of January 2006.
We did not attempt to identify the reasons that only 7 of more than   400 commercial airports that were eligible to participate in the SPP had  submitted an application. However, in our November 2004 report on the  SPP, we reported that of the 26 airport operators we interviewed, 20 said  their airport would not apply to participate in the SPP in the first year of  the program, 5 were uncertain whether to apply for the 2004 cycle, and   1 said his airport planned to apply, but only for its international passenger  terminal. Among the 20, 16 said they were satisfied with federal screeners  or did not see any benefit to applying to participate in the SPP and 13 cited  concerns about airport liability in the event of a terrorist attack.
In May 2005, TSA approved the SPP application for the Sioux Falls airport,  and in December 2005, TSA awarded a contract for passenger and checked  baggage screening services at Sioux Falls to a private screening  contractor. In February 2006, this award enabled Sioux Falls airport to  transition from TSA federal screeners to private screeners employed by  the contractor. According to the contractor, it will use 30 FTEs, 7 less than  TSA’s screener allocation for Sioux Falls airport, without compromising  security or customer service. The contractor expects to achieve  operational efficiencies and cost savings for its screening operations at  this airport due to the reduction in FTEs.
In addition, during February 2006, TSA awarded a contract to a private  screening contractor at one of the five pilot program airports. TSA is in  the process of awarding contracts to the remaining four airports that  applied to use private screeners. As of February 28, 2006, TSA received  proposals from private screening companies for the Greater Rochester  International, Tupelo, Kansas City, and San Francisco International  airports. TSA also released the request for proposals for San Francisco  International airport.
TSA also approved 34 private screening companies for listing on a  qualified vendors list, which identifies that these companies are eligible to  perform passenger and checked baggage screening services in the SPP.
section_title: Overview of TSA Budget for SPP
paragraphs: DHS’s fiscal year 2006 appropriations provides nearly $2.54 billion to fund  the screener workforce—about $2.4 billion for federal passenger and  checked baggage screener full-time equivalents and an additional   $139.6 million to pay for screening contractors at the five pilot program  airports. In accordance with its appropriations, TSA plans to fund the SPP  from the same budget line item as federal screening operations to provide  flexibility on the number of airports that can participate in the program. In  this manner, the costs for contracts with private screening contractors are  to be funded by the cost of the federal operations that are being displaced.
section_title: Overview of the SAFETY Act
paragraphs: The SAFETY Act, enacted as part of the Homeland Security Act of 2002,  offers liability and other protections to sellers of qualified anti-terrorism  technologies. According to DHS, services, such as screening services, are  eligible to receive liability protection under the SAFETY Act if designated  as qualified anti-terrorism technologies, thus limiting liability risks for the  private screening contractor and its subcontractors, suppliers, vendors,  and customers. SAFETY Act protection pertains to “claims arising out of,  relating to, or resulting from an act of terrorism” where qualified anti- terrorism technologies have been deployed. According to DHS, the  SAFETY Act reflects the intent of Congress to ensure that the threat of  liability does not deter the potential manufacturers or sellers of anti- terrorism technologies from developing and commercializing technologies  that could significantly reduce the risks or mitigate the effects of large- scale acts of terrorism. The SAFETY Act does not offer indemnification  (compensation for losses incurred) to sellers of qualified anti-terrorism  technology but rather limits, and in some instances may completely bar,  claims brought against sellers of anti-terrorism technologies that have  been deployed in defense against or response or recovery from a terrorist  incident. If a seller of a potential anti-terrorism technology wishes to be  awarded SAFETY Act protections, the seller must formally apply to the  department using the forms provided by DHS, furnish the entire requisite  supporting data and information, and successfully demonstrate  compliance with the act’s requirements.
section_title: Types of Contracts Awarded by TSA
paragraphs: TSA awarded one of two types of contracts for extending contractor  performance at the five pilot program airports. Both these types of  contracts were awarded on a non-competitive basis to the private  screening contractors. TSA awarded the first type of contract—cost-plus- award-fee contracts (a type of cost-reimbursement contract)—to the four  private screening contractors providing screening services at four of the  five pilot program airports. These contracts, which are generally used  when the costs are not known, provide for payment of allowable incurred  costs, to the extent prescribed in the contract. A cost-plus-award-fee  contract provides for a fee consisting of (1) a base amount that is a  percentage of the estimated cost fixed at inception of the contract and  (2) an award amount that the contractor may earn in whole or in part  during the contract period and that is sufficient to provide motivation for  excellence in such areas as quality, timeliness, technical ingenuity, and  cost-effective management. The actual award amount is based upon an  evaluation by TSA compared against criteria spelled out in the contract.  This determination and the methodology for determining the award fee are  unilateral decisions made solely at the discretion of the government.
TSA awarded the second type of contract—a fixed-price-award-fee  contract—to one private screening contractor. This type of contract is  generally used when the requirements are reasonably known and a  reasonable basis for firm pricing by the contractor exits. A fixed-price  award fee contract establishes a fixed price (including normal profit) for  the effort, which will be paid for satisfactory contract performance, and an  award fee. The award fee earned (if any) will be paid in addition to that  fixed-price based on periodic evaluations of the contractor’s performance  against an award-fee plan. TSA awarded a fixed-price-award-fee contract  to a private screening contractor at Tupelo airport, a security category IV  airport, the smallest airport.
According to the Federal Acquisition Regulation (FAR), which generally  governs federal government procurement activities, the negotiation of  contract type and price (or estimated cost and fee) should result in  reasonable contractor risk and provide the contractor with the greatest  incentive for efficient and economical performance.A firm-fixed-price  contract, which best utilizes the basic profit motive of a business  enterprise, shall be used when the contractor risk involved is minimal or  can be predicted with an acceptable degree of certainty. The FAR provides  that when a reasonable basis for firm pricing does not exist, other contract  types (such as cost reimbursement) should be considered, and  negotiations should be directed toward selecting a contract type that will  appropriately tie profit to contractor performance. As a service continues  to be contracted over time, however, and after experience provides a basis  for firmer pricing, the FAR advises that cost risk should shift to the  contractor and a fixed-price contract should be considered. The FAR  specifically states that contracting officers should avoid protracted use of  a cost-reimbursement contract after experience provides a basis for firmer  pricing. Additionally, under the FAA acquisition policy followed by TSA,  “he use of fixed-price contracts is strongly encouraged whenever  appropriate.”
section_title: DHS and Congress Have Begun to Address Liability Protection Issue at Airports Using Private Screeners, but Stakeholder Concerns about Liability and Other Program Issues Remain
paragraphs: DHS awarded some of the liability protections available under the  SAFETY Act to three of the four private screening contractors that applied  for it and stated that it will decide the status of future applications on a  case-by-case basis in accordance with criteria described in the act.  However, DHS cannot award the most extensive level of protection under  the SAFETY Act, certification status, until it can determine whether  contractors will perform as intended—a criterion that must be satisfied  before awarding such coverage. DHS officials stated that DHS has not  been able to award SAFETY Act certification status to contractors because  TSA has not yet finalized performance standards for assessing whether  contractors have performed as intended. While all four current screening  contractors we interviewed stated that SAFETY Act protection was  important, they did not state that they would be unwilling to participate in  the SPP without certification under the SAFETY Act. For example, one  contractor said it had too much time and money invested in providing  private screening services to not participate in the SPP. Congress has since  granted legal protection from lawsuits to all airports where TSA conducts  or oversees passenger and checked baggage screening. Specifically, the  fiscal year 2006 DHS appropriations act shields airports from, among other  things, virtually all liability related to negligence or wrongdoing by private  screening contractors, their employees, or federal screeners. In addition,  TSA made an effort to improve the screener hiring process by granting  contractors and FSDs more input and flexibility in the hiring process,  though some contractors, as well as FSDs at airports with federal  screeners, remain concerned about the timing of the assessments and the  length of time the assessment process takes.  TSA has also taken steps to  clarify SPP roles and responsibilities between federal and private sectors,  but the four private screening contractors we interviewed still had  questions about the roles and responsibilities of TSA staff at the airports  they served.
subsections: section_title: DHS Has Provided SAFETY Act Protection to Three of the Four Current Private Screening Contractors and Will Decide Future Coverage on a Case-by-Case Basis
paragraphs: Officials at DHS’ Science and Technology Division stated that all anti- terrorism technologies submitted to the department for protection under  the SAFETY Act are evaluated—including screener services—on a case- by-case basis, in accordance with the criteria defined by the act’s two- tiered protection status, as follows:  Designation status. Designation status protects a seller of anti-terrorism  technology in the event the technology fails to thwart an act of terrorism  by limiting the type and amount of damages a plaintiff may recover such  that a seller’s potential liability cannot exceed the amount of insurance  coverage maintained by the seller. To receive designation status, anti- terrorism technologies, including screening services, must be evaluated by  DHS against the seven criteria set out in the SAFETY Act: (1) prior U.S.  government use or demonstrated substantial utility and effectiveness;   (2) availability of the technology for immediate deployment in public and  private settings; (3) existence of extraordinarily large or unquantifiable  risk of exposing the seller or other provider of such anti-terrorism  technology to potential liability; (4) substantial likelihood that the  technology will not be deployed unless the risk management protections  of the SAFETY Act (limited liability) are conferred; (5) the magnitude of  risk to the public if the technology is not deployed; (6) evaluation of all  scientific studies that can be feasibly conducted to assess the capability of  the technology to substantially reduce risks of harm; and (7) anti-terrorism  technology that would be effective in facilitating the defense against acts  of terrorism, including technologies that prevent, defeat or respond to  such acts.
Certification status. Once designated, qualified anti-terrorism  technologies become eligible for certification under the SAFETY Act,  which gives the seller the legal status of a government contractor and  renders the seller virtually immune from any claims that might arise in the  event the technology fails to thwart an act of terrorism, provided the seller  does not act fraudulently or with willful misconduct in submitting  information to DHS. To certify, DHS must determine if the qualified anti- terrorism technology will (1) perform as intended, (2) conform to the  seller’s specifications, and (3) be safe for use as intended. Certification  status cannot be awarded unless these three criteria have been met. DHS  places certified anti-terrorism technologies and services on an Approved  Product List for Homeland Security.
DHS determined that the four private screening contractors serving the  five pilot program airports were eligible for SAFETY Act protection. Once  this determination was made, after November 2004, three of the four  current private screening contractors applied for and were provided  designation status under the SAFETY Act. Contractors that apply to the  SPP in the future are to be evaluated individually, as their applications to  the program are processed. TSA awarded a contract for private screening  services at Sioux Falls and Jackson Hole airports. The status of SAFETY  Act coverage for these airports, if the contractors apply for coverage, will  be determined at a later point in time.
section_title: Contractors’ Concerns about Liability Not Yet Resolved
paragraphs: As of January 2006, one issue pertaining to how the SAFETY Act would be  applied to contractors remained unresolved and is a cause for concern for  one of the four contractors we interviewed. Specifically, DHS officials  stated that they have not been able to award SAFETY Act certification  status to contractors because TSA has not yet finalized performance  standards for assessing whether contractors have performed as intended.  DHS SAFETY Act officials stated that once TSA finalizes its performance  standards, the contractors that previously received designation status may  submit an application for SAFETY Act certification. The application is to  include evidence demonstrating that they are meeting the TSA-defined  performance standards. DHS will evaluate the material submitted by the  applicant against the TSA standards. According to DHS officials, assuming  the applicant is able to demonstrate that it is performing as TSA intends,  there should be no impediment to granting certification. When the three  contractors that already have SAFETY Act designation status were asked  to comment on whether they would continue to participate in the SPP  without certification status, two contractors told us they would. One of  these two contractors said it had too much time and money invested in  providing private screening services to not participate in the SPP.  The  third contractor said that its company’s $50 million in general liability  insurance coverage excludes acts of terrorism, thus the company  believed it “would remain exposed to serious liability concerns related to  terrorist threats  risks.” This contractor did not, however, explicitly  state that it would not participate in the SPP going forward, if certification  status were not awarded.
In general, contractors may offset potential liability arising from acts of  terrorism by purchasing commercially available liability insurance. Two  of the four private screening contractors currently under contract to TSA  purchased insurance policies that protect them from acts of terrorism.  Both contractors stated that their policies were inadequate to cover the  liability resulting from a major terrorism attack and that SAFETY Act  protection was, therefore, additionally necessary to provide protection to  the contractor. As to the importance of SAFETY Act protection to  potential future participants in the SPP, in November 2004, we reported  that five of six prospective SPP private screening contractors we  interviewed—those not currently serving airports—stated that the issue of  whether they would receive liability protection was important and would  greatly affect whether they would participate in the SPP if selected by TSA  as a qualified contractor. In addition, officials with two aviation  associations representing hundreds of airports, whom we interviewed,  stated that their members believed that SAFETY Act protection—both  designation and certification—was necessary for contractors to  participate in the SPP.
section_title: DHS Appropriations Act Addresses Airports’ Concerns about Liability Exposure Issue
paragraphs: The status of SAFETY Act coverage for airports, and liability coverage in  general for airports using private screeners, differs from coverage for  contractors. While DHS has determined that contractors performing  screening services are eligible to receive liability protection under the  SAFETY Act, the department has not determined whether airports that do  not perform screening services are eligible for liability coverage under the  act. In October 2005, however, Congress enacted legislation that granted  airports legal protection from lawsuits. Specifically, section 547 of the  Department of Homeland Security Appropriations Act, 2006, shields  airport operators from virtually all liability relating to the airport  operator’s decision on whether or not to apply to opt-out of using federal  screening, and any acts of negligence, gross negligence, or intentional  wrongdoing by either a qualified private screening company under  contract to DHS, its employees, or by a federal screener. Prior to the  enactment of this act, three of the seven airport operators we interviewed  expressed concerns about whether the government would extend liability  protection to them. They were concerned that if a security incident arose  that resulted in litigation, they may become a party to a lawsuit. Officials  with two aviation associations, whom we also interviewed at that time,  also expressed concerns about airport liability. After the enactment of the  2006 appropriations act, one of the three airport operators that had  expressed concerns about liability told us that the protection available  under section 547 of the act had addressed its concerns about its airport’s  liability. A second airport operator that we contacted after enactment of  section 547 had not yet reviewed the provision and stated that it could not  confirm whether its airport would be protected from liability.
section_title: TSA Granted Private Screening Contractors Flexibility in Hiring Process, but Contractor Concerns Remain
paragraphs: TSA made an effort to improve the screener hiring process by granting  contractors and FSDs more input and flexibility in the hiring process,  including more frequent assessments of screener candidates and two  options for performing these assessments. Prior to November 2004, TSA  had scheduled candidate assessment forums on a regional basis 1 to   2 times a year to evaluate a pool of candidates interested in screener  positions. At that time, private screening contractors, like FSDs at airports  with federal screeners, had to rely on TSA to authorize the hiring of  screeners and establish candidate assessment forums—a process that  could take several months. Beginning in November 2004, as part of the  contract extensions, TSA began requiring the pilot program private  screening contractors to submit annual hiring plans to TSA for review,  indicating their anticipated screener staffing needs. The intention was to  use this information to plan for more frequent and timely screener  assessments conducted regionally and locally—up to 6 times a year.  Despite TSA’s planned increase in the frequency of assessments, private  screening contractors, as well as FSDs at airports with federal screeners,  remain concerned about their inability to conduct hiring on an as needed  basis because TSA still controls the scheduling of assessment forums.  One contractor, for example, stated that despite the scheduling of more  frequent assessment forums, it still could not fully implement its hiring  plan because the assessments did not necessarily coincide with its hiring  periods.
In response to contractor concerns about the candidate assessment  process, in November 2004, TSA began allowing private screening  contractors two options for evaluating screener candidates:     Option 1: Contractors may draw screener candidates from a pool  developed by a private company under contract with TSA, which is  responsible for assessing potential screener candidates. This company  administers a computer-based aptitude test, mental and physical tests,  and conducts background checks at regional assessment centers. The  contractor is under no obligation to accept these applicants.
Option 2: Contractors may use TSA’s assessment company for the  aptitude test alone, and develop and implement additional assessment  activities on their own, provided they meet ATSA requirements and  TSA guidance.
According to TSA officials, all four private screening contractors have  selected from these two options for hiring screeners. The contractors’  views about the hiring process were mixed. For example, one contractor  we interviewed said that because TSA has allowed it to conduct its own  assessments, the length of the entire assessment process has been reduced  from several months to 2 weeks. This contractor, which was using option  two, is now conducting key parts of the assessment process. According to  this contractor, its use of option two has resulted in a more efficient,  effective, and significantly less costly process. A second contractor using  option two stated that it had established a new hire recruitment,  assessment, and training program. According to this contractor, its use of  option two has resulted in its ability to identify more qualified screener  candidates, improve screener retention, and fill screener vacancies on an  as needed basis. However, the other two contractors remained concerned  about the length of time the assessment process lasts. One of these  contractors stated that the duration of the process was still so long that  potential screeners found other jobs first and dropped out of  consideration. This contractor, which was using option two, proposed  using FSD staff to conduct the assessments to streamline and shorten the  assessment process. According to TSA officials, TSA did not accept this  suggestion because TSA’s Office of Human Resources determined it would  have been too costly to allow FSD staff to conduct the assessments. TSA  officials stated that they offered the contractor the same assessment  options that are available to all airports with federal screeners. Officials  further stated that they will continue to examine all aspects of the  assessment process in an effort to offer greater efficiency and flexibility in  screener hiring for both federal and contract screeners.
section_title: TSA Has Taken Steps to Clarify SPP Roles and Responsibilities between Federal and Private Sectors, but Questions about Division of Labor Remain
paragraphs: While TSA has defined the roles and responsibilities for FSDs, FSD staff,  and private screening contractors, among others, in its August 2005 SPP  transition plan, the details contained in this plan have not been  communicated to or shared with private screening contractors. TSA and  SPP procurement officials stated that they consider the transition plan to  be an internal document that TSA does not intend to distribute outside of  the agency. However, officials stated that the information on roles and  responsibilities under the SPP would be available to prospective private  screening contractors as part of the SPP contracting process. Additionally,  TSA SPP officials stated that they presumed that FSDs had communicated  this information to the current private screening contractors. Further, TSA  officials stated that TSA’s June 2004 guidance on the SPP provides  information on roles and responsibilities of SPP stakeholders. However,  our review of the guidance found that it did not clearly delineate the roles  and responsibilities of TSA airport staff and the private screening  contractors. For example, the guidance did not include any information on  the roles and responsibilities of some TSA airport staff, such as screening  managers and training coordinators, and did not clarify how their roles  and responsibilities would differ from those of the private screening  contractors. Additionally, the four private screening contractors we  interviewed had questions about the roles and responsibilities of TSA staff  at the airports they served, including screening managers and stated that,  in their view, TSA had not clearly defined the roles and responsibilities of  TSA staff at airports participating in the SPP. When asked whether FSD  and FSD staff roles and responsibilities were clear, one contractor stated  that he did not believe that TSA had recognized that the roles of training  managers and screening managers at airports using federal or private  screeners are different. A second contractor stated that, in his view, TSA  had not standardized the roles and responsibilities of TSA airport staff  across the five airports currently using private screeners. Similarly, a third  contractor stated that TSA roles and responsibilities need to be more well- defined, particularly the role of FSD airport staff and TSA local contract  staff. Finally, the fourth contractor stated that the separation of roles and  responsibilities has been a major challenge on a daily basis in part because  TSA staff at screening checkpoints assert control and impose operational  changes at the checkpoints—tasks that the contractor believes it is  responsible for, rather than TSA staff. This contractor identified the need  for TSA to clearly define the roles of the various stakeholders involved in  the SPP and to establish guidelines on TSA’s oversight and regulatory  responsibilities at airports participating in the SPP.
In September 2005, in reporting on the ability of FSDs to address airport  security needs, we stated that TSA airport stakeholders (including airport  operators) at some of the airports we visited stated that the FSD’s role  was not sufficiently clear, and at least one stakeholder at every airport we  visited said such information had never been communicated to them. We  recommended that DHS direct TSA to communicate the authority of the  FSD position, as warranted, to FSDs and all airport stakeholders. In  response, TSA agreed to update the role of the FSD and communicate this  information to airport stakeholders. As of December 2005, however, TSA  had not yet implemented this recommendation, but stated that the matter  is being considered by a TSA steering committee. In addition, a consulting  firm that evaluated the private screening pilot program in April 2004  recommended that TSA clearly delineate the roles and responsibilities  among federal and private screening managers and their staff and include  this information in its contracts with the private screening contractors.  Based on our review of the June 2004 guidance on the SPP and the  contracts awarded to the current private screening contractors in  November 2004, TSA had not included this information. TSA officials  stated that they plan to clearly delineate roles and responsibilities of the  FSD, FSD staff, and private screening contractors in the forthcoming SPP  contracts.
According to our standards for internal controls, agency management  should ensure there are adequate means of communicating with external  stakeholders on issues that may have a significant impact on the agency’s  ability to achieve its goals. By not sharing detailed information on roles,  responsibilities, and authorities described in the SPP transition plan with  all FSDs and private screening contractors, TSA may be missing an  opportunity to support the effective performance and management of  essential functions related to the screening process. Additionally, without  clear and specific information on roles and responsibilities under the SPP,  it may be difficult for prospective SPP contractors to develop an informed  estimate of the costs of providing screener services.
section_title: TSA Provides Some Incentives to Contractors to Achieve Cost-Savings and Plans to Shift More Cost Risk to Contractors at Larger Airports in 1 to 2 Years
paragraphs: Through its contracts, TSA offers the private screening contractors some  incentives to decrease costs. Specifically, TSA’s cost reimbursement  contracts for screening services at four of the five airports currently using  private screeners provide some incentives in the form of an award fee tied  in part to the contractor’s ability to achieve cost efficiencies and  innovations. However, despite TSA’s use of cost-savings as a basis for a  portion of the award fees, opportunities for government cost-savings may  be limited because under the cost-reimbursement contracts the  government bears most of the cost risk—the risk of paying more than it  expected. TSA plans to shift more cost risk to contractors by competitively  awarding fixed-price-award fee contracts for screening services at the four  smallest airports that will participate in the SPP. TSA officials said they  also plan to competitively award fixed-price contracts for screening  services at larger airports, but will not do so for another 1 to 2 years— when they believe that screening costs at larger airports will be better  known.
subsections: section_title: TSA Plans to Transition from Cost-Reimbursement to Fixed-Priced Contracts, but Stated That an Additional 1 to 2 Years Was Needed to Do So at Larger Airports
paragraphs: TSA expects that the SPP will operate at a cost that is competitive with  equivalent federal operations and will achieve cost-savings, where  possible. However, opportunities for cost savings are somewhat limited  because of various requirements that contractors must meet in performing  the contract. Specifically, under ATSA, private screening companies must  provide compensation and other benefits to contract screeners at a level  not less than that provided to federal screeners. Further, the contracts  require that contractors ensure that security checkpoints are staffed in  accordance with TSA’s standard operating procedures and other  government requirements and that the screeners have the qualifications  and training established by the government. While these government  airport security standards must be met, TSA has structured its existing  contracts to provide some incentives to contractors for cost savings.  Specifically, over the last 3 years, TSA has awarded cost-reimbursement  contracts with an award fee component for screening services at four of  the five airports currently using private screeners. These contracts  provide for payment of allowable incurred costs, to the extent prescribed  in the contract (typically up to a specified cost ceiling). In addition, the  government also agrees to award a separate amount (base fee) fixed at  inception of the contract and an award amount (award fee) that the  contractor may earn in whole or in part during performance that is  sufficient to provide motivation for excellence in such areas as quality,  technical approach, and cost-effective management. The amount of the  award fee to be paid is determined by the government’s judgmental  evaluation of the contractor’s performance in terms of the criteria stated  in the contract.
Because cost-savings and contract management account for 20 percent of  the award fee determination for the current screening services contracts,  these contracts do provide some incentive for contractor cost efficiency.  Specifically, the award fee plan establishes the expectation that  contractors will provide screening services with cost efficiencies and  innovation, while meeting the security standards, mission objectives, and  compensation levels required by ATSA and TSA, respectively. These cost  and contract management factors include:    Overtime/personnel costs-–evaluates the contractor’s ability to control  overtime and personnel costs.
Innovation/continuous improvement-–evaluates the contractor’s ability  to build on previous experiences/accomplishments and utilize  innovative approaches, techniques and tools.
Other direct/indirect cost-–evaluates the contractor’s ability to control  direct labor cost and overtime costs and its ability to effectively  manage its subcontract costs through use of competition to the  greatest extent practicable and through documented cost analysis  substantiating the reasonableness of subcontract costs. Indirect cost  control evaluates the contractor’s ability to control its indirect costs.
Despite TSA’s use of cost-savings as a basis for a portion of the award  fees, opportunities for government cost-savings may be limited in part  because under the cost-reimbursement contracts the government bears  most of the cost risk—the risk of paying more than it expected.  Specifically, under cost-reimbursement contracts, the government must  reimburse the contractor for all allowable costs as provided in the  contract.  TSA plans to shift most cost risk to its contractors by moving to  a fixed-price-award fee contract in the next 1 to 2 years. A fixed-price type  of contract places upon the contractor the maximum risk and full  responsibility for all costs and resulting profit or loss, providing maximum  incentive for the contractor to control costs and perform efficiently.  Further, in a competitive environment, pricing by contractors for a fixed- price contract would be subject to marketplace pressures that would  provide incentives for the contractor to control costs and reduce prices in  order to win the contract. The award fee component of a fixed-price  contract is used to motivate the contractor by relating the amount of profit  or fee payable under the contract to the contractor’s performance in the  areas of operations, management, contract compliance, and human  resources. Because the contract is fixed-priced, the award fee portion  does not assess cost management.
TSA has awarded a fixed-price-award-fee contract to the contractor  providing screening services at the smallest of the five airports using  private screeners, while the contracts for screening services for the other  four airports remain as cost-reimbursement contracts. TSA officials stated  that the fixed-price contract was awarded for the one airport (on a  noncompetitive basis) because costs there were considered predictable  and therefore a reasonable basis for firm pricing by the contractor existed.  Table 3 provides information on TSA’s contracts with current private  screening contractors.
TSA officials stated that as of February 2006, TSA had awarded, was  planning to award, or was in the process of awarding, additional fixed- price contracts on a competitive basis for screening services at three other  small airports (categories II, III, and IV) under the SPP. TSA officials  acknowledged that cost-reimbursement contracts place most of the cost  risk on the government, rather than the contractor, but said the agency  would not award fixed-price contracts for screening services at the two  larger airports using private screening contractors for another 1 to 2 years.  TSA officials stated that they would not award fixed-price contracts to  these contractors because they did not know the costs of screening at the  larger airports, where they believe costs are variable, and therefore they  believe that TSA would be at greater risk of awarding a contract for a  higher cost than might actually be necessary. TSA officials acknowledged  that TSA already had, through an independent cost-data study, identified  and collected some cost and performance data on passengers and checked  baggage screening operations at 15 airports with private and federal  screeners, including four category X and four category I airports and all  five pilot program airports. This study, which was completed in October  2004, looked in particular at cost drivers—factors that contribute to  overall expenses. Moreover, an April 2004 studyconducted for TSA by a  consulting firm estimated how much TSA spent for screening operations at  each of the five pilot program airports—including contract payments as  well as costs borne by TSA—and compared the results with estimates of  how much TSA would have spent had it actually conducted the screening  operations at those airports.
TSA officials stated that the cost information identified in these two  studies provided useful data to help determine the costs of screening at  airports currently using private screeners, but said additional information  is needed to assist in transitioning to fixed-price contracts for screening  services at larger airports. Specifically, TSA officials stated that additional  cost information based on the actual costs of participating in the SPP is  needed for the larger airports because the SPP contracts differ in two key  ways from the pilot and extension contracts that TSA previously awarded.  First, the SPP contracts will include specific performance measures and  targets that the contractors must meet. Second, the contracts will allow  for contractors to recommend and, if approved, implement innovations,  and to select among options for assessing screener candidates and training  screeners. The officials stated that it would therefore be difficult for  prospective SPP contractors for the larger airports to accurately estimate  the costs of providing screening services for a fixed-price contract for  larger airports. As a result, TSA officials stated that they needed up to   2 additional years to determine estimated costs in order to potentially  transition to fixed-price contracts, and therefore would continue using  cost-reimbursement contracts with the largest airports (categories X and  I) for that period. By using competitive bidding procedures to award  fixed-price contracts to qualified firms, as TSA contemplates, TSA will also  help to bring marketplace pressures to bear on competitors’ proposed  costs and fees or prices and could enable TSA to maximize contractors’  incentives to control costs and ensure that the contractor, rather than the  government, will bear more of the cost risk associated with performance  of private screening operations.
section_title: Performance Goals and Measures Developed by TSA to Assess SPP Contractors Have Not Been Approved by DHS
subsections: section_title: TSA Has Developed Performance Measures to Evaluate Security, Cost, Innovation, and Other Facets of Contractor Performance under the SPP, but DHS Has Not Approved These Measures
paragraphs: TSA has developed performance goals and draft measures and targets to  assess the performance of private screening contractors under the SPP,  but DHS has not yet approved them or established a time frame for doing  so. Until DHS approves these measures, TSA cannot finalize and  implement them to assess performance. Performance goals are  measurable objectives against which actual achievement can be  compared. Performance measures are the yardsticks to assess an agency’s  success in meeting performance goals, while a performance target is a  desired level of performance expressed as a tangible, measurable  objective, against which actual achievement will be compared. Together,  these performance metrics are used to assess an agency’s progress toward  achieving the results expected. We reported in April 2004 that without data  to assess the performance of private screening operations, TSA and airport  operators have limited information from which to plan for the possible  transition of airports from a federal screening system to a private system.  In our November 2004 report, we stated that TSA had begun drafting  performance measures for this purpose. In the current contracts that TSA  awarded to the four private screening contractors, TSA established an  award fee process to motivate contractor performance. These contracts  were modified in February and March 2005 to implement the award fee  process.
TSA’s draft quality assurance surveillance and award fee plan for the SPP,  dated October 2005, identifies the performance measures TSA plans to use  to assess the performance of private screening contractors against TSA’s  major goals for the program. According to TSA, the five goals for the SPP  in the areas of security, customer service, costs, workforce management,  and innovation, are:    Ensure security.
Provide world class customer service.
Implement cost efficiencies.
Respect the screening workforce.
Create a partnership that leverages strengths of the private and public  sector.
TSA’s draft quality assurance surveillance and award fee plan for the SPP  includes planned performance measures in 14 areas that are to be applied  to all private screening companies that participate in the SPP. These  performance measures, in addition to an innovation measure, are to be  used to determine the award fee provided to contractors that participate in  the SPP. Table 4 describes the performance measures.
TSA established draft performance targets for 10 of the 14 measures,  which all SPP contractors will be required to meet. TSA officials said  individual contractors that are accepted as SPP participants in the future  will be required to meet TSA’s performance targets for the remaining four  measures—passenger screening threat image projection (TIP) detection  rate; passenger screening TIP false alarm rate; screener recertification  pass rates; and customer satisfaction. The performance indicators for the  four measures for which targets have not yet been set by TSA are to be  specific to each airport participating in the SPP. TSA stated that it has  established baseline data for these four performance measures describing  how federal screeners or private screening contractors have actually  performed at individual airports, over time, as well as an overall average of  performance. Using the baseline data as a starting point, performance  targets would then be set for each airport. For example, if a baseline  shows that historically, all airports met the performance measure for  screener recertification pass rates 70 percent of the time, TSA would set  the target measure at or above 70 percent. TSA officials stated that they  are currently working to identify incentives to encourage better results at  airports that have historically not met TSA’s performance standards for  passenger and checked baggage screening. TSA is considering providing  financial incentives for a limited time in an effort to quickly move its  airports to meet TSA’s baseline level of performance.
TSA officials stated that DHS must approve the draft performance goals,  measures, and targets before they can be finalized, but as of January 2006,  DHS had not yet done so, and had not set a deadline for doing so. We  asked TSA and DHS officials which office within DHS was responsible for  approving these performance metrics, but the officials were not able to  provide us with the information. Until the draft performance measures are  finalized by DHS, TSA will not be able to implement its performance  measures for the SPP. According to our standards for internal controls,  agencies must have systems in place for measuring, reporting, and  monitoring program performance. In addition, as we have reported in our  prior work on the importance of using the Government Performance  Results Act (GPRA) to assist with oversight and decision making, credible  performance information is essential for the Congress and the executive  branch to accurately assess agencies’ progress toward achieving their  goals. Further, the draft measures and targets TSA developed for the SPP  will also be used by DHS to determine whether to award private screening  contractors certification status under the SAFETY Act. Until the SPP  measures and targets are finalized, DHS officials stated that they cannot  determine whether contractors will perform as intended—criteria that  must be satisfied before awarding certification status.
section_title: Conclusions
paragraphs: Since initiating the SPP in November 2004, DHS and TSA have taken steps  to develop a legal, contractual, and programmatic framework that enables  the private sector to provide passenger and checked baggage screening  services, with federal oversight in place to help ensure that security and  screener performance is consistent and comparable at airports, whether  federal or private screeners are used. As of January 2006, only 7 of over  400 airports that were eligible to apply to participate in the SPP had  submitted an application. While we did not attempt to identify the reasons  for the small number of applicants to the SPP, a contributing factor may be  airports’ concerns about liability. In November 2004, we reported that half  of the airport operators we interviewed (13 of 26) were concerned about  airport liability in the event that a private screener failed to detect a threat  object that led to a terrorist incident. Aviation associations that represent  hundreds of airports have also identified liability as a major concern  among airports. Although Congress’ recent effort to shield airports from  liability in the fiscal year 2006 DHS appropriations act may address this  concern, there have been no additional applicants since the act was  passed. Furthermore, by extending a level of federal liability protection  through the SAFETY Act to current private screening contractors, DHS  has laid the groundwork for future contractors to potentially receive  comparable protection. Ongoing concerns among prospective participants  in the SPP regarding the availability of the most extensive level of  protection under the SAFETY Act—certification—may be alleviated once  TSA finalizes a standard of performance for private screening contractors  that DHS can utilize to determine if contractors have demonstrated that  they will perform as intended.
As TSA moves forward with implementing the SPP, several opportunities  exist for strengthening the management and oversight of the program.  First, SPP applicants need clear information on what their roles and  responsibilities are to be at airports where a privatized screener workforce  operates with federal oversight. The absence of such guidance may affect  the ability of responsible officials to effectively and efficiently manage  screening checkpoints and the screener program in general. Additionally,  without clear and specific information on roles and responsibilities of  private screening contractors under the SPP, it may be difficult for  prospective SPP contractors to develop an informed estimate of their  personnel needs and associated costs under the SPP—information that is  needed for the competitive bidding process.
Second, in addition to concerns about liability protection, airports in the  past expressed concerns about the degree of management control they  would have over various aspects of screening services. Since then, TSA  has provided additional operational flexibilities to private screening  contractors, such as granting contractors and FSDs more input and  flexibility in the screener hiring process. Contractors have reported  efficiencies they have achieved as a result of these flexibilities, including  using fewer screeners than authorized by TSA. Although steps have been  taken to address concerns regarding airports’ liability and the need for  contractors to have additional management control over various aspects  of screening services, only two additional airports, in addition to the five  pilot program airports, applied to participate in the SPP.  We believe that  identifying the underlying reasons for the small number of applicants to  the SPP may be helpful to TSA and others in assessing what, if any,  changes may be needed to the program.
Third, while TSA is not required to adhere to the Federal Acquisition  Regulation with respect to contracting practices, it has acknowledged the  advantages of fixed-price contracts in situations where costs are  reasonably understood. To this end, TSA has begun the contract award  process for the four smaller airports using a fixed-price type of contract.  TSA has decided to continue to use cost-plus-award-fee contracts rather  than fixed-price contracts with private screening contractors providing  services at the larger airports for at least an additional 1 to 2 years so that  it can continue to collect information on the costs of screening operations  at these airports. Using fixed-price contracts, as TSA plans to do, would  result in the contractors assuming substantial cost responsibility from the  government related to screener operations and help ensure that private  screening contractors deliver the most cost-effective services, while  ensuring that TSA and ATSA requirements related to maintaining airport  security are met. The use of competitively awarded fixed-price contracts  should provide a built-in incentive for contractors to identify cost-saving  opportunities and innovations, which in turn may help reduce costs of  screening contracts at the larger airports using private screeners. TSA  could make these cost-savings opportunities available to airports with  federal screeners, as appropriate, thereby transferring the efficiencies  identified by the private sector to the federal government.
Finally, until DHS approves the performance goals, measures, and targets  for the SPP, it will not have a mechanism in place beyond the ongoing  contracts for assessing the performance of private screening contractors.  Without these performance goals, measures, and targets it may be difficult  for TSA to identify areas of screener operations that contractors may be  able to improve.
section_title: Recommendations for Executive Action
paragraphs: To strengthen its administration of the SPP and to help address  stakeholder concerns, we recommend that the Secretary of DHS direct the  Assistant Secretary, TSA, to take the following actions:    Formally document and communicate with all FSDs, current private  screening contractors, and entities that apply to the SPP, the roles and  responsibilities of all stakeholders that participate in the SPP,  pertaining to the management and deployment of screening services.
To help ensure the completion of a performance management framework  for the SPP so that TSA can assess SPP contractors and to promote  accountability of SPP contractors for achieving desired program  outcomes, we recommend that the Secretary of the Department of  Homeland Security take the following action:    Establish a time frame for completing its review of the performance  goals, measures, and targets for the SPP so that TSA may apply them at  the earliest possible opportunity.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DHS and TSA for review and  comment. On March 10, 2006, we received written comments on the draft  report, which are reproduced in full in appendix II. DHS generally  concurred with the findings and recommendations in the report, and  stated that efforts to implement our recommendations will help them  develop a more effective, efficient, and economical administration of  TSA’s SPP. With regard to our recommendation that TSA formally  document and communicate with all FSDs, current private screening  contractors, and entities that apply to the SPP, the roles and  responsibilities of all stakeholders that participate in the SPP pertaining to  the management and deployment of screening services, DHS identified  steps that TSA is taking to this end.  Specifically, DHS stated that TSA  updated its SPP transition plan, which, among other things, further  clarifies the relationships among the FSD, FSD staff, and private screening  contactors, and other stakeholders as they relate to SPP program  management. DHS also stated that TSA has assembled a transition team to  work closely with SPP stakeholders to foster awareness and ensure  communication regarding the roles and responsibilities of all involved  parties working under the SPP. TSA’s successful implementation of these  ongoing efforts should address the concerns we raised regarding  documenting and communicating roles and responsibilities under the SPP.
In addition, regarding our recommendation that DHS establish a time  frame for completing its review of the performance goals, measures and  targets for the SPP so that TSA may apply them at the earliest possible  opportunity, DHS stated that TSA had established performance metrics  and had provided it to DHS for its review. However, DHS did not specify a  time frame for completing its review. We continue to believe that it is  important for DHS to establish a time frame for completing its review of  the performance goals, measures, and targets for the SPP. Without these  performance metrics, TSA will not have a mechanism in place beyond the  ongoing contracts for assessing the performance of private screening  contractors. Further, until performance metrics are finalized, it remains  unlikely that DHS will award such contractors certification under the  SAFETY Act.
DHS also provided updated information on the status of the SPP, which  we incorporated where appropriate.
As agreed with your office, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 7 days from the  date of this report. At that time, we will send copies of this report to the  Secretary of the Department of Homeland Security and the Administrator  of the Transportation Security Administration and interested  congressional committees. We will also make copies available to others  upon request. In addition, the report will be made available at no charge  on GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-3404 or berrickc@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff that made major contributions to this report are  listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To assess the Transportation Security Administration’s (TSA) efforts to  implement the Screening Partnership Program (SPP), we analyzed (1) the  status of federal efforts to determine whether and to what extent liability  protection will be provided to private screening contractors and airports,  and actions taken on other stakeholder concerns related to participation  in the SPP; (2) how TSA has determined it will achieve cost-savings goals  for screener operations through the SPP, specifically through choice of  contract used and contract terms; and (3) TSA’s progress in developing  and implementing performance goals, measures, and targets to assess the  performance of the private screening contractors who will be participating  in the SPP.
To assess the status of federal efforts to determine whether and to what  extent liability protection should be provided to private screening  contractors and airports, and actions taken on other stakeholder concerns  related to participation in the SPP, we reviewed Department of Homeland  Security (DHS) and TSA documentation on the Support of Anti-terrorism  by Fostering Effective Technologies Act (SAFETY Act) and the SPP.  Specifically, we reviewed DHS guidance posted on its Web site related to  the SAFETY Act and other DHS documentation on this act. We also  reviewed TSA’s written responses to stakeholders frequently asked  questions about the SPP, including information on liability protection;  TSA’s transition plan for the SPP, which documents internal guidance on  transitioning an airport from a federal screener workforce to a private  screener workforce; TSA’s communications plan for the SPP; airport  applications to the SPP; and other guidance-related materials TSA  developed for airports and private-screening contractors. Additionally, we  reviewed relevant legislation, such as Aviation and Transportation  Security Act and the SAFETY Act, our prior reports that addressed issues  related to the SPP and the use of private sector screeners, and testimony  at congressional hearing on the SPP. Further, we interviewed DHS  officials regarding the SAFETY Act and TSA headquarters officials  responsible for implementing the SPP to determine efforts underway to  address stakeholder concerns regarding the SPP. We also conducted semi- structured telephone interviews with the four private screening  contractors currently providing passenger and checked baggage screening  services, the airport directors at the seven airports that applied to  participate in the SPP (the five pilot program airports and two airports  that applied to participate in the SPP, namely, Elko Regional Airport in  Elko, Nevada and Sioux Falls Regional Airport in Sioux Falls, South  Dakota), and the federal security directors (FSD) at each of these airports  to obtain their views on TSA’s efforts to implement the SPP and to address  stakeholders concerns. Finally, we interviewed officials from two aviation  associations—the American Association of Airport Executives and the  Airports Council International, and a major liability insurance provider— to obtain information on the type of insurance available to private  screening contractors.
To assess the status of TSA’s efforts to achieve cost-savings in screener  operations through the SPP, specifically with respect to the choice of  contract used, and contract terms, we reviewed TSA’s contracts for  screening services for the four contractors currently providing passenger  and checked baggage screening services. We did not review the contracts  that TSA awarded in early 2006 to two contractors to provide private  screening services in the SPP. Additionally, we reviewed TSA’s acquisition  policies and procedures, the Federal Acquisition Regulation, and the  Federal Aviation Administration’s acquisition management system, to  identify standards and guidance for contracting practices of TSA and the  federal government. Further, we reviewed TSA’s transition plan and other  SPP guidance to identify TSA’s current and planned approaches for  identifying screening program costs. We also reviewed TSA’s activity- based costing study that assessed the cost of passenger and checked  baggage screening operations at 15 airports, including the 5 that  participated in the 2-year pilot program using private screeners. We  determined that the results of the activity-based costing study were  sufficiently reliable for the purpose of our review. Finally, to gather  perspectives on opportunities for cost-savings under the SPP, we  interviewed TSA SPP and contracting officials, the four contractors  currently providing screening services, the seven airport directors who  applied to the SPP and the FSDs at these airports, and representatives of  the American Association of Airport Executives and the Airports Council  International. We did not review TSA’s actual determination of the amount  of contractor award fee. Nor did we review the conduct of TSA’s  performance evaluation boards or fee determining official in evaluating  contractor performance against award fee criteria (including cost-savings)  and determining the amount of the contractors’ award fee. However, we  did verify that TSA had evaluated contractor performance (including cost- savings) in making award fee determinations.
To assess TSA’s progress in developing and implementing performance  goals, measures, and targets to assess the performance of the private  screening contractors who will be participating in the SPP, we reviewed  the terms of TSA’s award fee process specified in the current contracts  and TSA’s draft quality assurance surveillance and award fee plan. We also  reviewed TSA’s June 2004 guidance on the SPP, other guidance-related  material TSA developed for private screening contractors and airports  regarding the SPP, TSA’s contracts for the private screening contractors  currently providing screening services, TSA testimony at congressional  hearings, and our prior reports that addressed issues related to the SPP  and the use of private-sector screeners. A listing of our prior reports is  contained in appendix IV. Additionally, we interviewed TSA headquarters  officials responsible for the SPP.
We performed our work from March 2005 through March 2006 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Comments from the Department of Homeland Security
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the contact named above, David Alexander, C. Jenna  Battcher, Chuck Bausell, Amy Bernstein, David Hooper, Lara Laufer,  Thomas Lombardi, Hugh C. Pacquette, Lisa Shibata, Maria Strudwick, and  Adam Vodraska made key contributions to this report.
section_title: Related GAO Reports
paragraphs: Aviation Security: Significant Management Challenges May Adversely  Affect Implementation of the Transportation Security Administration’s  Secure Flight Program. GAO-06-374T. Washington, D.C.: February 9, 2006.
Aviation Security: Federal Air Marshal Service Could Benefit from  Improved Planning and Controls. GAO-06-203. Washington, D.C.:  November 28, 2005.
Aviation Security: Federal Action Needed to Strengthen Domestic Air  Cargo Security. GAO-06-76. Washington, D.C.: October 17, 2005.
Transportation Security Administration: More Clarity on the Authority  of Federal Security Directors Is Needed. GAO-05-935. Washington, D.C.:  September 23, 2005.
Aviation Security: Flight and Cabin Crew Member Security Training  Strengthened, but Better Planning and Internal Controls Needed.   GAO-05-781. Washington, D.C.: September 6, 2005.
Aviation Security: Transportation Security Administration Did Not  Fully Disclose Uses of Personal Information During Secure Flight  Program Testing in Initial Privacy Notes, but Has Recently Taken Steps  to More Fully Inform the Public. GAO-05-864R. Washington, D.C.: July 22,  2005.
Aviation Security: Better Planning Needed to Optimize Deployment of  Checked Baggage Screening Systems. GAO-05-896T. Washington, D.C.:  July 13, 2005.
Aviation Security: TSA Screener Training and Performance  Measurement Strengthened, but More Work Remains. GAO-05-457.  Washington, D.C.: May 2, 2005.
Aviation Security: Secure Flight Development and Testing Under Way,  but Risks Should Be Managed as System Is Further Developed.   GAO-05-356. Washington, D.C.: March 28, 2005.
Aviation Security: Systematic Planning Needed to Optimize the  Deployment of Checked Baggage Screening Systems. GAO-05-365.  Washington, D.C.: March 15, 2005.
Aviation Security: Measures for Testing the Impact of Using  Commercial Data for the Secure Flight Program. GAO-05-324.  Washington, D.C.: February 23, 2005.
Transportation Security: Systematic Planning Needed to Optimize  Resources. GAO-05-357T. Washington, D.C.: February 15, 2005.
Aviation Security: Preliminary Observations on TSA’s Progress to Allow  Airports to Use Private Passenger and Baggage Screening Services.   GAO-05-126. Washington, D.C.: November 19, 2004.
General Aviation Security: Increased Federal Oversight Is Needed, but  Continued Partnership with the Private Sector Is Critical to Long-Term  Success. GAO-05-144. Washington, D.C.: November 10, 2004.
Aviation Security: Further Steps Needed to Strengthen the Security of  Commercial Airport Perimeters and Access Controls. GAO-04-728.  Washington, D.C.: June 4, 2004.
Transportation Security Administration: High-Level Attention Needed  to Strengthen Acquisition Function. GAO-04-544. Washington, D.C.: May  28, 2004.
Aviation Security: Challenges in Using Biometric Technologies.   GAO-04-785T. Washington, D.C.: May 19, 2004.
Nonproliferation: Further Improvements Needed in U.S. Efforts to  Counter Threats from Man-Portable Air Defense Systems. GAO-04-519.  Washington, D.C.: May 13, 2004.
Aviation Security: Private Screening Contractors Have Little Flexibility  to Implement Innovative Approaches. GAO-04-505T. Washington, D.C.:  April 22, 2004.
Aviation Security: Improvement Still Needed in Federal Aviation  Security Efforts. GAO-04-592T. Washington, D.C.: March 30, 2004.
Aviation Security: Challenges Delay Implementation of Computer- Assisted Passenger Prescreening System. GAO-04-504T. Washington, D.C.:  March 17, 2004.
Aviation Security: Factors Could Limit the Effectiveness of the  Transportation Security Administration’s Efforts to Secure Aerial  Advertising Operations. GAO-04-499R. Washington, D.C.: March 5, 2004.
Aviation Security: Computer-Assisted Passenger Prescreening System  Faces Significant Implementation Challenges. GAO-04-385. Washington,  D.C.: February 13, 2004.
Aviation Security: Challenges Exist in Stabilizing and Enhancing  Passenger and Baggage Screening Operations. GAO-04-440T. Washington,  D.C.: February 12, 2004.
The Department of Homeland Security Needs to Fully Adopt a  Knowledge-based Approach to Its Counter-MANPADS Development  Program. GAO-04-341R. Washington, D.C.: January 30, 2004.
Aviation Security: Efforts to Measure Effectiveness and Strengthen  Security Programs. GAO-04-285T. Washington, D.C.: November 20, 2003.
Aviation Security: Federal Air Marshal Service Is Addressing Challenges  of Its Expanded Mission and Workforce, but Additional Actions Needed.  GAO-04-242. Washington, D.C.: November 19, 2003.
Aviation Security: Efforts to Measure Effectiveness and Address  Challenges. GAO-04-232T. Washington, D.C.: November 5, 2003.
Airport Passenger Screening: Preliminary Observations on Progress  Made and Challenges Remaining. GAO-03-1173. Washington, D.C.:  September 24, 2003.
Aviation Security: Progress Since September 11, 2001, and the  Challenges Ahead. GAO-03-1150T. Washington, D.C.: September 9, 2003.
Transportation Security: Federal Action Needed to Enhance Security  Efforts. GAO-03-1154T. Washington, D.C.: September 9, 2003.
Transportation Security: Federal Action Needed to Help Address  Security Challenges. GAO-03-843. Washington, D.C.: June 30, 2003.
Federal Aviation Administration: Reauthorization Provides  Opportunities to Address Key Agency Challenges. GAO-03-653T.  Washington, D.C.: April 10, 2003.
Transportation Security: Post-September 11th Initiatives and Long- Term Challenges. GAO-03-616T. Washington, D.C.: April 1, 2003.
Airport Finance: Past Funding Levels May Not Be Sufficient to Cover  Airports Planned Capital Development. GAO-03-497T. Washington, D.C.:  February 25, 2003.
Transportation Security Administration: Action and Plan to Build a  Results-Oriented Culture. GAO-03-190. Washington, D.C.: January 17,  2003.
Aviation Safety: Undeclared Air Shipments of Dangerous Goods and  DOT’s Enforcement Approach. GAO-03-22. Washington, D.C.: January 10,  2003.
Aviation Security: Vulnerabilities and Potential Improvements for the  Air Cargo System. GAO-03-344. Washington, D.C.: December 20, 2002.
Aviation Security: Vulnerability of Commercial Aviation to Attacks by  Terrorists Using Dangerous Goods. GAO-03-30C. Washington, D.C.:  December 3, 2002.
Aviation Security: Registered Traveler Program Policy and  Implementation Issues. GAO-03-253. Washington, D.C.: November 22,  2002.
Airport Finance: Using Airport Grant Funds for Security Projects Has  Affected Some Development Projects. GAO-03-27.  Washington, D.C.:  October 15, 2002.
Commercial Aviation: Financial Condition and Industry Responses  Affect Competition. GAO-03-171T. Washington, D.C.: October 2, 2002.
Aviation Security: Transportation Security Administration Faces  Immediate and Long-Term Challenges. GAO-02-971T. Washington, D.C.:  July 25, 2002.
Aviation Security: Information Concerning the Arming of Commercial  Pilots. GAO-02-822R.  Washington, D.C.: June 28, 2002.
Aviation Security: Vulnerabilities in, and Alternatives for, Preboard  Screening Security Operations. GAO-01-1171T. Washington, D.C.:  September 25, 2001.
Aviation Security: Weaknesses in Airport Security and Options for  Assigning Screening Responsibilities. GAO-01-1165T. Washington, D.C.:  September 21, 2001.
Homeland Security: A Framework for Addressing the Nation’s  Efforts. GAO-01-1158T. Washington, D.C.: September 21, 2001.
Aviation Security: Terrorist Acts Demonstrate Urgent Need to Improve  Security at the Nation’s Airports. GAO-01-1162T. Washington, D.C.:  September 20, 2001.
Aviation Security: Terrorist Acts Illustrate Severe Weaknesses in  Aviation Security. GAO-01-1166T. Washington, D.C.: September 20, 2001.