Aviation Security: Preliminary Observations on TSA's Progress to Allow Airports to Use Private Passenger and Baggage Screening Services
Published: 2004-11-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Beginning on November 19, 2004, the Transportation Security Administration (TSA) is required by law to begin allowing commercial airports to apply to use private contractors to screen passengers and checked baggage. A federal workforce has performed this work since November 2002, in response to a congressional mandate that the federal government take over screening services after the terrorist attacks of September 11, 2001. A 2-year pilot program at five airports testing the effectiveness of private sector screening in a post-September 11 environment concluded on November 18, 2004. This report contains GAO's preliminary observations related to TSA's progress in developing a private-sector screening program that allows airports to apply to opt out of using federal screeners. GAO assessed: (1) the status of TSA's efforts to develop policies and procedures for the opt-out program, including operational plans and guidelines for selecting airports and contractors that may participate; (2) guidance about the opt-out program that TSA has provided to airport operators and other stakeholders, or plans to develop, and how the information is communicated; and (3) TSA's efforts to develop performance measures for evaluating the opt-out program and contractor performance.
section_title: What GAO Found
paragraphs: As of November 2004, TSA has completed or is developing key policies and procedures for the opt-out program. Specifically, TSA has completed and released guidelines for determining how and when private screening contractors will be evaluated and selected to participate in the opt-out program. TSA also has released supplemental information for evaluating potential contractors, such as their financial capabilities. TSA also has prepared a draft technical statement of work for the private screening contractors operating at five pilot program airports, which is to serve as a basis for contractors seeking to serve other airports. In addition, TSA has developed, or is currently developing, internal guidance for managing the opt-out program, such as a transition plan for helping airports to move from federal to private screeners. TSA expects to complete the remaining policies and procedures by mid-2005. TSA is taking steps to communicate with stakeholders about the opt-out program by developing informational guidance and soliciting information and suggestions from them. For instance, since releasing initial summary guidance about the program in June 2004, TSA has posted an opt-out program application for airport operators that asks, among other things, the primary reason for wanting to participate in the opt-out program and the preferred timeline for transitioning to private screening operations. TSA also has posted lists of frequently asked questions and answers on its Web site, in response to questions from stakeholders about the airport application and contracting process. However, some airport operators, private screening contractors, and aviation industry representatives told GAO that they need additional information about how much leeway airports and contractors would have to manage the program, liability protection, and costs related to participating in the opt-out program. TSA is developing performance measures both to assess the screening performance of airports that will participate in the opt-out program and individual contractors performing the screening services, but specific performance measures have not been finalized. TSA said measures for the opt-out program will be based on measures already developed by an independent consulting firm for the five airports participating in the opt-out pilot program. These measures include how well screeners detect test threat objects, such as guns and knives, during screening operations. TSA is also developing performance measures to evaluate how well private screening contractors comply with the terms of their contracts, which will become part of a quality assurance plan. TSA expects to implement contractor-related performance measures in mid-2005, as contracts are being awarded. A draft of this report was provided to TSA. TSA officials generally agreed with our findings and provided technical comments that have been incorporated as appropriate.

section_title: Letter
paragraphs: In an effort to improve aviation security after the terrorist attacks of  September 11, 2001, the newly created Transportation Security  Administration (TSA) was charged by Congress with, among other things,  creating a federal workforce to assume the job of conducting passenger  and checked baggage screening at commercial airports—work that had  been performed by the private sector. The federalized workforce was to be  in place by November 2002. At the same time, TSA was required by Section  108 of the Aviation and Transportation Security Act (ATSA) to conduct a  2-year Private Screening Pilot program. The mission of the pilot, as defined  by TSA, was to test the effectiveness of using private screening  contractors in a post-September 11 environment. The pilot concluded on  November 18, 2004.
Using the pilot program as a starting point, ATSA requires TSA to begin  allowing airports to apply to opt out of using federal screeners in favor of  private contractors beginning on November 19, 2004. Consistent with  ATSA, TSA plans to begin receiving applications for this Screening  Partnership Program (known as the opt-out program) on that date. TSA  plans to begin selecting in early 2005 airports that can opt out, as well as  selecting contractors that will conduct private passenger and checked  baggage screening. TSA plans to begin transitioning selected airports to  private screening operations later in 2005.
This report contains our preliminary observations related to TSA’s  progress in developing the opt-out program. Specifically, we assessed   (1) the status of TSA’s efforts to develop policies and procedures for the  opt-out program, including operational plans and guidelines for selecting  airports and contractors that may participate; (2) guidance about the opt- out program that TSA has provided to stakeholders, or plans to develop,  and how the information is communicated; and (3) TSA’s efforts to  develop performance measures for evaluating the opt-out program and  contractor performance.
We plan to continue our evaluation of the opt-out program as TSA further  develops and implements the program.
To address our objectives, we reviewed documentation related to TSA’s  opt-out program and pilot program and interviewed various officials. We  analyzed TSA documents related to the opt-out program, including  program guidance developed for airports. We reviewed an independent  consulting study prepared for TSA that evaluated the pilot program. We  interviewed officials from two aviation associations—the American  Association of Airport Executives and the Airports Council International.  We attended an aviation security conference in September 2004, where  TSA officials and some airport operators discussed planning for the opt- out program, and we reviewed staff notes from two congressional  subcommittee-sponsored roundtables on the program. We also reviewed  ATSA provisions related to the opt-out program and related GAO reports.  In addition, we conducted telephone interviews with the operators of  randomly selected commercial airports from each of the five security risk  categories—X, I, II, III, and IV. We interviewed the airport operators of 4  to 6 airports in each category, for a total of 26 interviews (one official per  airport). We also conducted telephone interviews with officials from 6  private security contractors that we were able to contact from a listing of  10 contractors. The listing included private security contractors that  expressed an interest in providing passenger and checked baggage  screening services. Because of the small sample size, the results of our  interviews with airport operators and contractors cannot be generalized.  TSA released significant details on its opt-out program guidance after our  interviews; therefore, the interviewees’ responses were based only on the  information TSA had released at that point. Additional information on our  scope and methodology is contained in appendix I. We conducted our  work between September and November 2004 in accordance with  generally accepted government auditing standards.
subsections: section_title: Background
subsections: section_title: Opt-Out Provision of ATSA
paragraphs: Section 108 of ATSA (Pub. L. No. 107-71) required TSA to establish a  program permitting the more than 400 commercial airports using federal  passenger and checked baggage screeners to apply to use private, rather  than federal screeners. Beginning on November 19, 2004, all commercial  airports with federal security screening will be eligible to apply to opt-out  of using federal screeners. In addition to assessing airport applications for  using private screeners, TSA will select qualified private screening  contractors to conduct screening (including airports that seek to apply to  be private contractor screening companies), which meets ATSA’s and  TSA’s requirements. Nongovernmental employees, such as airport  directors or their representatives, would be able to participate as advisors  in the selection process, as long as the airport is not participating as a  qualified screening company. ATSA requires private screeners selected to  handle screening to meet the same hiring and training qualifications as  federal screeners. ATSA also mandated that the private screeners’ pay and  benefit levels should be not less than their federal counterparts.  Furthermore, ATSA required that the contractor companies be owned and  controlled by U.S. citizens.
ATSA also required TSA to establish a 2-year pilot program using qualified  private contractors to screen passengers and checked baggage at not more  than one airport from each security category. TSA selected five airports to  participate in the pilot program. The private passenger and checked  baggage screening contractors selected for the pilot program had to  comply with federal passenger and checked baggage screening standard  operating procedures.
In order to obtain an objective evaluation of the pilot program, TSA  retained the services of an independent consulting firm. The consultants  were charged with developing an evaluation methodology; conducting  performance evaluations and comparisons between the five participating  pilot program airports and federally screened airports; and developing a  process to help TSA determine if a private screening company can meet  ATSA’s performance standard for the opt-out program, which is to provide  a level of screening services and protection equal to or better than that  provided by federal screeners. The consultants found that, in general, the  private screening contractors met ATSA’s performance standard.  However, the consultants cautioned that the findings must be viewed in  light of several key factors. For example, the consultants reported that the  small number of pilot airports seriously limited the program’s usefulness  as a true scientific pilot and the ability of the findings to be generalizable  to apply to future privately screened airports. Additionally, the  performance data available for review and analysis were limited,  according to the consultants.
Outside of the pilot program, any commercial airport may apply to opt out  beginning on November 19, 2004. In accordance with ATSA, 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 with TSA. TSA will make the final approval of any  application submitted 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 the  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. The five airports selected to participate in the pilot program have  decided to continue using private screeners and will not have to apply for  the opt-out program beginning in November 2004.
section_title: Opt-Out Program Staffing and Budgeting
paragraphs: TSA created a program office in October 2004 to provide financial  oversight, ongoing operational support, communications, and transition  planning for airports that apply to opt out of using federal screeners. This  office was allocated 12 full-time-equivalent staff and, as of November 4,  2004, had 10 full-time staff on board. TSA plans to fund the opt-out  program from the same budget line items as federal screening operations  in order to provide flexibility on the number of airports that can  participate in the program. The costs for contracts with private screening  companies are to be funded by the cost of the federal operations that are  being displaced. The conference report accompanying the fiscal year   2005 Department of Homeland Security Appropriations Act (H.R. Conf.  Rep. No. 108-774) allocated appropriations of $2.424 billion to cover  personnel, compensation, and benefits for passenger and checked baggage  screeners and to cover screeners at the five pilot airports. This allocation  represents an increase of more than $200 million over the fiscal year   2004 enacted level of $2.2 billion. According to TSA, this increase is  necessary to fully fund compensation and benefits at the identified staffing  levels. The requested level of funding will support screener salaries and  management at all commercial airports, whether federalized or privatized.  Also, the conference report allocated just under $130 million for the five  pilot airports, an increase from $119 million in fiscal year 2004. This  funding is based on an estimate of resources necessary to maintain  screening at the current five pilot airports.
section_title: TSA’s June 2004 Guidance Describes Program Requirements
paragraphs: TSA issued its first written guidance for the opt-out program in June   2004, in an effort to provide airport operators and the aviation community  with information to gauge their level of interest in applying to participate  in the program. The guidance, posted on TSA’s Web site and distributed to  airport associations, provides information in three broad areas: legislative  requirements, program planning approach, and guidance on key issues. A  summary of the guidance follows.
subsections: section_title: ATSA Legislative Requirements
paragraphs: TSA’s guidance addresses ATSA legislative requirements, including how  applications from qualified private screening contractors would be  approved by applying the statutory standards of ATSA, including the level  of screening services and protection provided at the airport, and that  private contractor companies be owned and controlled by U.S. citizens.  TSA’s guidance also included information for airports on how TSA’s  screening pilot program was conducted, how the pilot program was  evaluated by a private consulting organization, and suggested program  improvements made by the consultants.
section_title: Program Planning Approach
paragraphs: The guidance discussed program structure, including costs. The guidance  notes, for instance, that federal and contract screeners would be funded  from the same pool of money and that costs for airports enrolled in the  program would be determined based on current federal screener  operations and TSA’s activity-based cost studies that estimate costs of  running an airport’s screening operations. TSA’s guidance states that these  cost studies would ensure that proposed costs by potential contractors are  in line with federal estimates. The guidance also states that airport  security screeners do not have the right to strike, whether TSA or a private  contractor employs them.
section_title: Guidance on Key Issues
paragraphs: ATSA directs TSA to receive applications from airports intending to apply  to opt out beginning November 19, 2004. The guidance states that TSA  intends to close the application period within 3 weeks of that time and will  re-open the application cycle in November 2005. The guidance states that  because ATSA does not identify specific criteria by which TSA is to  evaluate the airport application, TSA is currently developing and reviewing  potential specific criteria for determining which airports will be approved  and the sequence for their transition from federal to private screeners. The  guidance notes that TSA reserves the right to consider participation in the  program in light of an airport’s record of compliance on security  regulations and requirements.
TSA outlines three steps related to selecting contractors to perform  screening services: (1) TSA submits requests for information to the  aviation industry requesting input on acquisition issues, qualification  criteria, and information contractors would need as part of a proposal  process; (2) TSA develops a qualified vendors list to facilitate the vendor  selection process; and (3) TSA selects a private contractor to provide  screening services in airports selected for the screening partnership  program.
The guidance describes the roles and responsibilities of all major  stakeholders, including airport directors and federal security directors  (FSDs). TSA envisions both FSDs and airport authority as having  “important roles” in the selection of the private contractor. The technical  aspects of each private contractor’s screener contract will be managed  locally by the FSDs. TSA will set performance measurement standards and  each contractor will implement the standards. TSA seeks to give private  contractors “a significant amount” of operational control in such areas as  assessment and screener technical training, scheduling, recurrent training,  and administrative functions.
TSA said it would take “necessary steps” to enable FSDs and private  contractors to implement operational flexibilities, including conducting  recruiting, assessment, and screener technical training at the local level  while ensuring that national standards are met and within TSA’s  parameters. TSA is also in the process of developing a performance  measurement approach for the opt-out program and contractors. TSA is  considering several types of performance measures related to security  effectiveness, customer service, and cost. Specific measures and baselines  have not been finalized.
section_title: TSA Is Finalizing Policies and Procedures Governing the Opt-Out Program
subsections: section_title: TSA Has Developed Criteria for Qualifying Private Contractors, with Additional Information under Development
paragraphs: In late October 2004, TSA finalized and publicly released guidelines  providing criteria for determining how and when private screening  contractors will be evaluated and selected to participate in the opt-out  program. Any contractor that meets TSA and ATSA criteria (such as  owned and controlled by U.S. citizens) may apply to the program. While  TSA does not require companies seeking to become screening contractors  to have prior experience in the business, such experience is preferred.  Because TSA does not know how many airports will apply to participate in  the opt-out program in 2004, the agency cannot yet determine how many  private contractors may be hired to perform screening services. The  contractor-selection process involves three phases, to be completed  between November 2004 and May 2005. The phases and key milestones  included in the guidelines are as follows:  Phase I: Develop qualified offeror list (November 2004-January 2005).
Offerors seeking to be pre-qualified by TSA as potential contractors  must meet TSA and ATSA requirements (including owned and  controlled by U.S. citizens and ability to provide screening services at a  level equal to or greater than that provided by the federal government).
Offerors must agree to provide compensation and benefits at a level  that is not less than that provided by the federal government to the  federal screener workforce.
Offerors must agree to abide by TSA’s workforce transition rules,  including compliance with priority employment rules for TSA’s federal  employees displaced by privatization.
Phase II: Develop qualified vendor list (February 2005).
TSA issues request for proposal to contractors pre-qualified under  Phase I.
TSA will develop a qualified vendor list based on this population.
Offerors will be required to present technical and cost capabilities.
Qualified offerors will be selected based on ability to provide service in  a given geographical region.
Contractor proposals will not be evaluated until TSA determines how  many airports have applied to the opt-out program.
Phase III: TSA awards contracts to private screening contractors (May  2005).
TSA will award competitive task orders, or contracts, based on cost/price  analysis, among other things. TSA reserves the right to proceed with other  alternatives for contractor selection as appropriate.
TSA initiated Phase I on November 5, 2004, by posting a presolicitation  notice on www.fedbizopps.gov, in accordance with standard government  contracting practices. Contractors have until November 29, 2004, to  provide the information, such as financial capabilities, requested in the  presolicitation. Concurrently, TSA publicly released a presolicitation  synopsis for the opt-out program that supplements the October guidelines  on contractor criteria. This document provides additional evaluation  criteria on screener compensation and benefits, hiring preferences for  displaced government employees, financial capabilities of contractors, and  other areas.
Five of six private screening contractors we interviewed prior to TSA’s  release of the presolicitation synopsis identified that they wanted more  information on workforce transition rules, which govern how federal  screeners displaced by private screening contractors should be dealt with.  The October guidelines also identified that contractors must abide by  TSA’s workforce transition rules—but do not specify what the rules are.  The presolicitation synopsis states that federal screeners must be given  hiring preference, but no additional information is provided. All six private  screening contractors said that they did not know how TSA will make its  determination about whether 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 the federal  government. TSA officials said they would use the information provided by  contractors in response to the presolicitation notice to make this  determination.
In addition to the guidelines on criteria and the presolicitation synopsis,  TSA prepared a draft statement of work for the contractors that  participated in the opt-out pilot program and are continuing to provide  screening services. This document describes technical requirements that  private screening contractors must meet for performing screening  operations, support, and administration. According to TSA, the draft  statement of work is meant to give potential private contractors an idea of  the service requirements in the private screening pilot program, which are  likely to be similar to those for the opt-out program. TSA posted the  document on its opt-out Web site in early November 2004.
The contractors we interviewed also sought information on whether  contractors will be able to use the same companies TSA has relied on to  assess screener candidates and conduct initial screener training. The draft  statement of work prepared for contractors that participated in the pilot  program addresses this issue and has been posted on TSA’s Web site for  all interested parties to review.
Finally, private screening contractors told us they do not have an industry  trade association through which TSA can channel information about its  program activities. Five of six private screening contractors we  interviewed cited a need for a more direct line of communication between  TSA and their organizations beyond TSA’s Web site. For example, some  contractors suggested that TSA sponsor a forum specifically to address  contractors’ issues about the opt-out program. In addition, it was  suggested that TSA appoint a liaison, or point of contact, to help ensure  that information is communicated to contractors in a timely fashion.
section_title: TSA’s Internal Policies and Procedures for the Opt-Out Program Are under Development
paragraphs: TSA developed draft procedures to document how opt-out program  applications will be processed. These draft procedures—for internal use  only—describe opt-out program parameters, a descriptive narrative of the  application process, a matrix for each step in the process, an application  template, sample notification letter template, an application checklist, and  an application processing system template. TSA officials said that this  approach is under review and expects the application procedures to be  finalized in November 2004.
TSA developed a draft activity-based cost study, which is also an internal  document, not intended for public release. TSA plans to use the results of  the study to explain how TSA will determine the unit cost of screening  passengers in terms of the activities performed, review screening costs at  both privately screened and federally screened airports in order to identify  key cost drivers and best practices, and develop an efficient and  repeatable data collection method for future studies. This study is  currently under review within TSA. TSA expects to finalize this study later  in November 2004.
In addition, TSA developed a draft transition plan, which will serve as  internal guidance for the agency and is not intended for public release.  This is to be an operations plan designed to support TSA’s efforts to  transition airports from federal to private screeners. The plan is to  address, for example, TSA’s approach to giving federal screeners priority  for employment with private screening contractors. In addition, this plan  is to describe the roles and responsibilities of the TSA opt-out program  office, FSD staff, and private screening contractors. Activities to be  addressed in the plan include human resources, training, communication,  logistics, performance measurement, and field support. TSA expects to  refine the draft guide in December 2004 and plans to revise the plan on an  ongoing basis as it gains more experience with the transition to private  screening.
A draft communications plan is also under development and remains in  draft form. The purpose of this internal document is to reflect a strategy  for communicating key program events and developments to both internal  and external stakeholders. TSA told us the plan will contain information  on roles and responsibilities of key stakeholders, among other things. The  draft is undergoing final review within TSA. TSA has not set a date for  finalizing this plan.
section_title: TSA Is Taking Steps to Communicate with Stakeholders about the Opt-Out Program, but Some Say Additional Information Is Needed
subsections: section_title: Stakeholders Seek Additional Information from TSA on Operational Flexibilities, Liability, and Cost Issues
paragraphs: In addition to the June 2004 initial guidance, statement of work for the  pilot program contractors, and presolicitation synopsis, TSA has finalized  other informational guidance for airport operators and private screening  contractors. In October 2004, TSA posted the final version of its opt-out  application form for airports seeking to apply. TSA will use the application  to collect information on potential airports’ intentions regarding opting  out. For instance, in addition to asking airports to provide basic  information, such as point of contact, TSA seeks to learn whether airports  want to be the qualifying contractor performing the screening services.  TSA also asks airport officials to provide information on the airport  authority’s primary reason for wanting to participate in the opt-out  program, whether the airport has a preferred timeline for when the  transition to private screening should occur, and to list scheduled  activities that could interfere with the transition, such as peak travel  season and major construction.
TSA originally set a 3-week application window, from November 19, 2004,  to December 10, 2004, for accepting application from airports interested in  opting out of using federal screeners. However, based on input from  stakeholders, TSA decided less than 1 month before the application cycle  was to begin to extend the application deadline. As of November 15, 2004,  TSA had not established a final deadline.
Also, in October, TSA created an e-mail address to enable interested  parties to submit questions and request additional information about how  the opt-out program would be implemented. The goal of this effort was to  provide supplemental guidance for stakeholders that reflected issues they  wanted to know more about. A TSA official said the agency received  approximately 100 e-mails between late August and early November.  Based in part on these e-mails, in early September 2004, TSA developed  and posted on its Web site an initial list of responses to frequently asked  questions (FAQ). In early November 2004, TSA updated the FAQs to  reflect three separate topics: questions for the overall program, questions  about the airport application process, and questions about the contracting  process. TSA plans to continue to update these lists as needed. Some of  the information contained in the FAQs is new—that is, it is not addressed  in the June 2004 written guidance. Some of TSA’s FAQ responses,  however, restate the information in the written guidance, without  additional elaboration.
While these guidance documents have provided airport operators with  information on the basic parameters and legislative requirements of the  opt-out program, some airport operators, private screening contractors,  and airport industry representatives told us TSA has not yet addressed all  of their questions and concerns. The information that stakeholders told  TSA and us that they needed falls into three categories: operational  flexibility with respect to how much leeway airports and private screening  contractors would have to manage the program; liability protection in the  event that a screener fails to detect a threat object; and costs related to  participating in the opt-out program.
subsections: section_title: Operational Flexibility
paragraphs: Eight of the 20 airport operators we interviewed who said they would not  apply to opt out of using federal screeners in 2004 said that they needed  additional information about the range of flexibility private screening  contractors would be provided in terms of, for instance, their ability to  deploy screeners where they are needed most at a given airport. Some  airport industry representatives we spoke with raised operational  flexibility as a concern as well. All of the private screening contractors we  interviewed also said that they needed additional information on  operational flexibilities, including    whether contractors could collaborate with airport management  without having to involve TSA directly;    whether they would have the flexibility to determine appropriate  screener staffing levels at their airports and to assess screener  candidates and hire screeners on an as needed basis; and    whether they could develop and/or deliver screener training.
Among the questions e-mailed to TSA directly, some address operational  flexibilities, such as screener staffing levels. For example, one of the  questions pertained to whether an airport would be provided the same  number of contract screeners as are currently authorized under the federal  screener program. TSA responded in its FAQs that a qualified private  contractor will determine the number of contract screeners needed and  that TSA will provide guidelines for the contractors. TSA further noted  that it is seeking to provide flexibility to the contractors to manage the  operations as efficiently as possible and will look to them to identify  possible efficiencies in areas such as scheduling and use of part-time  employees as appropriate for the local airport.
The independent consulting firm under contract to TSA suggested that  TSA allow contractors serving the opt-out pilot program airports to assess  screener candidates and conduct screener training as a means of allowing  greater operational flexibilities. The consultants stated that greater  operational flexibilities would enable a more robust comparison of private  and federal screening operations. TSA officials said that they would permit  pilot program airports to pursue both options beginning in November  2004.
section_title: Liability Insurance
paragraphs: A second issue raised by stakeholders, including airport industry  representatives, pertained to liability—whether and to what extent  airports and private screening contractors would be liable in the event that  a privately contracted screener should fail to detect a threat object that  leads to a terrorist incident or use of a weapon, or threat object, on board.  Thirteen airport operators we interviewed cited concerns about liability.  In addition, all of the private screening contractors we interviewed cited  the need for additional guidance on liability protection. To address airport  and industry officials’ questions about liability issues, FAQs directs site  visitors to a Department of Homeland Security (DHS) Web site for  information on how to apply for liability protection under the SAFETY Act  of 2002. The Web site, however, does not provide information on whether  the SAFETY Act would cover private screening contractors that apply to  the opt-out program. According to DHS officials, DHS has determined that  the SAFETY Act will apply to private screening contractors in the opt-out  program. DHS’s Office of SAFETY Act Implementation has been working  with TSA to develop an expedited review process for SAFETY Act  applications from private screening contractors and plans to post specific  instructions for applicants on the SAFETY Act Web site. As of November  15, 2004, this information had not been posted. Five of the screening  contractors we interviewed said the issue of whether they would receive  liability protection was important and would greatly affect whether they  would participate in the program, if selected as a qualified contractor. Two  of the contractors said that without liability protection, they would not  participate in the program because it would be too risky, exposing them to  potential lawsuits. TSA officials said that commercially available insurance  is available and that under the current screening pilot program, each of the  contract screening companies had procured some amount of liability  insurance for terrorist activities.
section_title: Costs of Participation
paragraphs: A third issue pertained to the costs of participating in the program. Ten of  the 20 airport officials we spoke with that have decided not to apply to opt  out in 2004 cited questions about costs of participating in the program, and  in at least one case said they did not have enough cost-related information.  Representatives from two airport industry associations also mentioned  this issue. The FAQs address cost issues in the context of budgets for  federal and private screeners. For example, one question asks whether, if  federal budget appropriations are not made in a timely manner, TSA will  still be able to fund the private screening contractor during that period of  time. TSA’s response identified that it would fund screeners through a  continuing budget resolution passed by Congress. In response to a  question about whether budget limitations will apply to either federal or  contracted screeners, TSA’s response reiterates what is already stated in  the written guidance—that all funding for the opt-out program will come  from the same budget line items as federal screening operations. No  additional information is provided.
Three private screening contractors we interviewed also cited a need for  additional information on the requirement to provide at least equivalent  compensation and benefits to screeners transitioning from federal to  private screening contractors, as required by ATSA. The contractors said  they did not know whether they would be required to offer dollar-for- dollar parity for salaries and benefits or whether contractors must offer  the same health care and other benefits that federal screeners receive.  FAQs address this question in general terms, noting that private  contractors will have “some flexibility in fashioning their compensation  and benefits packages,” but do not elaborate further. TSA’s presolicitation  includes a compensation and benefits certification form that private  screening contractors applying to be on the qualified offeror list must  complete. The applicant has to certify that it will propose and pay at least  the minimum labor rate that is paid to screeners for every $1 of direct  labor and that benefits will be not less than 44.75 percent—the current  fringe benefits percentage as computed by TSA.
In addition, TSA has interpreted ATSA to require qualified private  screening companies to provide pay and benefits at a loaded cost (direct  hour plus percentage cost of fringe benefits) that equals or exceeds the  loaded cost of the pay and benefits provided to the federal government.  According to TSA, this approach provides the contractor with flexibility to  trade additional pay against other benefits, or to enhance certain benefits  and reduce others; enables the contractor to determine and provide the  best package necessary for the recruitment and retention of quality  screeners; and increases flexibility while permitting recruitment and  retention of quality screeners.
section_title: TSA Is Developing Performance Measures for the Opt- Out Program, but More Work Remains To Be Done
paragraphs: TSA is developing measures to assess the screening performance of  airports that will participate in the opt-out program and individual  contractors performing the screening services, but specific performance  measures have not been finalized. In June 2004, TSA developed a draft of  the performance measurement principles and actual measures that TSA is  considering to measure the performance of the entire opt-out program and  private screening operations.  For example, TSA plans to measure the  results of annual screener proficiency reviews, customer satisfaction and  complaints, and screening costs. TSA may also evaluate the program in  terms of how well screeners perform using the threat image projection  (TIP) system to detect threat objects.(TIP projects images of threat  objects on an x-ray screen during actual operations and records whether  screeners identify threat objects.) These measures will be similar to those  used by the independent consulting firm to compare the performance of  private screening contractors operating at the five pilot program airports  against federal screening services. TSA expects to complete a preliminary  draft of a performance measurement plan later this month and to finalize  this plan by February 2005.
In addition to assessing how the performance of federal and private  screening services compare, TSA is working to develop performance  measures for evaluating how well private screening contractors comply  with the terms of their contracts. TSA officials said that the opt-out  program office is in the process of determining whether quantifiable  measures are available, how to collect relevant data, and the best way to  establish baseline measures. TSA expects to complete its data collection  plan later this month and to complete the final plan by February 2005.
The contractor-related performance measures TSA plans to develop are to  be included in a quality assurance plan. This plan is an element in TSA’s  draft statement of work specifically for the five airports that participated  in the pilot program, which are continuing to use private screeners. The  plan includes general information on how TSA will measure and assess  their performance and how TSA will use the performance data to make  decisions on performance awards, extension of contracts, and termination  of contracts. Contractors may, for example, be evaluated—and their  contracts extended—based on their screeners' performance on TIP scores.  TSA officials said that the measures included in the draft statement of  work are not as sophisticated or rigorous as those that TSA will adopt in  the future. TSA expects to implement these measures in mid-2005, as  contracts are being awarded.
We plan to continue to collect and analyze TSA documentation on the opt- out program and to follow-up with airports and private security  contractors on their views of TSA’s development and implementation of  the program.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Department of Homeland Security  and the Transportation Security Administration for review and comment.  The agencies generally agreed with our findings, and we incorporated their  technical comments where appropriate.
We are sending copies of this report to the Secretary of the Department of  Homeland Security and interested congressional committees. We will also  make copies available to others upon request. In addition, the report will  be available at no charge on GAO’s Web site at http://www.gao.gov.
If you have any questions about this report, or wish to discuss it further,  please contact me at (202) 512-8777 or by e-mail at berrickc@gao.gov. Key  contributors to this report were David Alexander, Amy Bernstein, Lisa  Brown, Elizabeth Curda, Thomas Lombardi, Jobenia Odum, Lisa Shibata,  Maria Strudwick, Nicole Volchko, and Nicolas Zitelli.
section_title: Appendix I: Scope and Methodology
paragraphs: Our preliminary observations are based on our review of documentation  related to the Transportation Security Administration’s (TSA) Screening  Partnership Program (opt-out program) and contract screening pilot  program and interviews with various officials. We reviewed documents  including:    all guidance-related materials TSA had developed to date for airports; reports from an independent consulting study prepared for TSA that  evaluated the contract screening pilot program and made suggested  improvements to the program;  information from two congressional committee-sponsored roundtables  on the program;  testimony at congressional hearings on the program;    provisions of the Aviation and Transportation Security Act;   our prior reports that addressed issues related to the opt-out program,  including the performance of airport passenger and checked baggage  screeners.
In addition, we interviewed TSA headquarters officials, officials from two  aviation associations—the American Association of Airport Executives  and the Airports Council International and TSA’s private contractor that is  assisting TSA in its development of the opt-out program. We conducted  semistructured telephone interviews with the operators of 26 randomly  selected commercial airports nationwide. The 26 airports were selected  randomly from all airports in each of the five airport categories—X, I, II,  III, and IV. Category X airports generally have the largest number of  enplanements, and category IV airports have the smallest number. We  interviewed one official at each of 4 to 6 airports in each category.  Although the airports were selected randomly, because of the small  sample size in each category the results of these interviews may not be  generalized to other airports. We conducted telephone interviews with  officials from 6 of 10 private security contractors selected from a listing of  private security contractors that had expressed interest in the opt-out  program. The listing of private security contractors that expressed interest  in the opt-out program is included in Airport Security Report, (Potomac,  MD: Air Safety Week), September 22, 2004, Volume 11, Number 19. The  views and opinions of these contractors may not be representative of  those of other contractors and, therefore, should not be generalized. TSA  released significant details on its opt-out program guidance after our  interviews; therefore, the interviewees’ responses (airport operators’ and  contractors’) were based only on the information TSA had released at that  point. We conducted our work from September to November 2004 in  accordance with generally accepted government auditing standards.  Because our review is still ongoing, the results presented in this report are  preliminary.
To complete our work, we plan to continue to collect and analyze TSA  documentation related to each of our three objectives and to follow-up  with airports and private security contractors on their views of TSA’s  development and implementation of the opt-out program.