Results

TSA obligated almost $470 million from fiscal year 2002 through fiscal year  2005 for EDS and ETD maintenance, according to TSA budget documents. TSA was not able to provide us with data on the maintenance  cost per machine before fiscal year 2005 because, according to TSA  officials, TSA’s previous contract with Boeing to maintain EDS and ETD  machines was not structured to capture these data. In response to the DHS OIG, TSA agreed to recover any  excessive award fees paid to Boeing, if TSA determined that such fees  were not warranted. Lastly, life-cycle  cost estimates were not developed for the Boeing, Siemens, L-3, and GE  InVision contracts before the maintenance contracts were executed, and,  as a result, TSA did not have a sound estimate of maintenance costs for all  the years the machines are expected to be in operation. In  commenting on our draft report in July 2006, DHS stated that the TSA  contractor estimated completing a prototype life-cycle cost model by  September 2006. TSA officials told us that they perform such reviews, but  do not document their activities since there are no TSA policies or  procedures requiring them to do so. Further, TSA officials provided no evidence  that they ensure that contractors are performing scheduled preventative  maintenance. Without stronger oversight, TSA will not have  reasonable assurance that contractors are performing as required and that  full payment is justified based on meeting mean downtime requirements. Recommendations

To help improve TSA’s management of EDS and ETD maintenance costs  and strengthen oversight of contract performance, we recommend that the  Secretary of Homeland Security instruct the Assistant Secretary,  Transportation Security Administration, to take the following three  actions:    establish a timeline to complete its evaluation and close out the Boeing  contract and report to congressional appropriations committees on its  actions, including any necessary analysis, to address the Department of  Homeland Security Office of Inspector General’s recommendation to  recover any excessive fees awarded to Boeing Service Company;    establish a timeline for completing life-cycle cost models for EDS,  which TSA recently began; and  revise policies and procedures to require documentation of the  monitoring of EDS and ETD maintenance contracts to provide  reasonable assurance that    contractor maintenance cost data and performance data are  recorded and reported in accordance with TSA contractual  requirements and    self-reported contractor mean downtime data are valid, reliable, and  justify the full payment of the contract amount. Regarding our recommendation that TSA establish a timeline to close out  the Boeing contact and report to congressional committees on its actions  to recover any excessive fees, DHS stated that TSA has conducted a  contract reconciliation process to ensure that no fees would be paid on  costs that exceeded the target due to poor contractor performance and  that Boeing and TSA have reached an agreement in principle on this  matter and the documentation is in the approval process with closure  anticipated in July 2006. In fiscal year 2006, TSA estimates it will spend $199 million  and has projected it will spend $234 million in fiscal year 2007. Background

TSA was mandated to screen all checked baggage using explosive  detection systems at airports by December 31, 2003.1  Explosive Detection Systems (EDS) use computer-aided  tomography X-rays to recognize the characteristics of explosives. Explosive Trace Detection (ETD) machines use chemical analysis  to detect traces of explosive material vapors or residues. In March 2005, TSA signed firm fixed price contracts for EDS and ETD  maintenance. Factors That Played a Role in EDS and ETD

		Factors That Played a Role in Maintenance Costs and Could Impact Future Costs

Different factors have played a role in costs to date and will influence future maintenance costs for EDS  According to a September 2004 DHS OIG report, TSA did not follow sound contracting practices in  administering the Boeing contract, which was primarily for the installation and maintenance of EDS and  ETD machines. Among other things, the DHS OIG found that TSA had paid provisional award fees totaling $44  million through December 2003 without any evaluation of Boeing’s performance. MDT is calculated by the number of hours a machine is out of service in a month divided by  the number of times that machine is out of service per month. Without  such a time frame, TSA may not be identifying cost efficiencies and making informed  procurement decisions.
Why GAO Did This Study

Mandated to screen all checked baggage by using explosive detection systems at airports by December 31, 2003, the Transportation Security Administration (TSA) has deployed two types of screening equipment: explosive detection systems (EDS), which use computer-aided tomography X-rays to recognize explosives, and explosive trace detection (ETD) systems, which use chemical analysis to detect explosive residues. This report discusses (1) EDS and ETD maintenance costs, (2) factors that played a role in these costs, and (3) the extent to which TSA conducts oversight of maintenance contracts. GAO reviewed TSA's contract files and processes for reviewing contractor cost and performance data.

What GAO Found

TSA obligated almost $470 million from fiscal years 2002 through 2005 for EDS and ETD maintenance, according to TSA budget documents. In fiscal year 2006, TSA estimates it will spend $199 million and has projected it will spend $234 million in fiscal year 2007. TSA was not able to provide GAO with data on the maintenance cost per machine before fiscal year 2005 because, according to TSA officials, its previous contract with Boeing to install and maintain EDS and ETD machines was not structured to capture these data. Several factors have played a role in EDS and ETD maintenance costs. According to a September 2004 Department of Homeland Security's Office of Inspector General report, TSA did not follow sound contracting practices in administering the contract with Boeing, and TSA paid provisional award fees totaling $44 million through December 2003 without any evaluation of Boeing's performance. TSA agreed to recover any excessive award fees paid to Boeing if TSA determined that such fees were not warranted. In responding to our draft report, DHS told us that TSA and Boeing had reached an agreement in principle on this matter and that documentation was in the approval process with closure anticipated in July 2006. Moreover, TSA did not develop life-cycle cost models before any of the maintenance contracts were executed and, as a result, TSA does not have a sound estimate of maintenance costs for all the years the machines are expected to be in operation. DHS also stated in its comments on our draft report that a TSA contractor expected to complete a prototype life-cycle cost model by September 2006 and that TSA anticipated that the EDS model would be completed 12 months after the prototype was approved. Without such an analysis, TSA may not be identifying cost efficiencies and making informed procurement decisions on future purchases of EDS and ETD machines and maintenance contracts. TSA has taken actions to control costs, such as entering into firm-fixed-price contracts for maintenance starting in March 2005, which have advantages to the government because price certainty is guaranteed. Further, TSA incorporated standard performance requirements in the contracts including metrics related to machine reliability and monthly performance reviews. For EDS contractors, TSA has specified that the full agreed price would be paid only if mean downtime (i.e., the number of hours a machine is out of service in a month divided by the number of times that machine is out of service per month) requirements are met. Although TSA has policies for monitoring contracts, TSA officials provided no evidence that they are reviewing required contractor-submitted performance data, such as mean downtime data. TSA officials told GAO that they perform such reviews, but do not document their activities because there are no TSA policies and procedures requiring them to do so. As a result, without adequate documentation, TSA does not have reasonable assurance that contractors are performing as required and that full payment is justified based on meeting mean downtime requirements.