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. 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. 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. 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. 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. 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. 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).