[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

TSA OVERSIGHT PART IV: IS TSA EFFECTIVELY PROCURING, DEPLOYING, AND
STORING AVIATION SECURITY EQUIPMENT AND TECHNOLOGY?
=======================================================================

JOINT HEARING

before the

COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM

and the

COMMITTEE ON TRANSPORTATION
AND INFRASTRUCTURE

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

MAY 9, 2012

__________

Printed for the use of the Committees on Oversight and Government
Reform and Transportation and Infrastructure

Committee on Oversight and Government Reform
Serial No. 112-160
Committee on Transportation and Infrastructure
Serial No. 112-85

Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform

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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of
FRANK A. LoBIONDO, New Jersey Columbia
GARY G. MILLER, California JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois CORRINE BROWN, Florida
SAM GRAVES, Missouri BOB FILNER, California
BILL SHUSTER, Pennsylvania EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California RICK LARSEN, Washington
ANDY HARRIS, Maryland MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington MICHAEL H. MICHAUD, Maine
FRANK C. GUINTA, New Hampshire RUSS CARNAHAN, Missouri
RANDY HULTGREN, Illinois GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania DANIEL LIPINSKI, Illinois
CHIP CRAVAACK, Minnesota MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas JASON ALTMIRE, Pennsylvania
LARRY BUCSHON, Indiana TIMOTHY J. WALZ, Minnesota
BILLY LONG, Missouri HEATH SHULER, North Carolina
BOB GIBBS, Ohio STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania LAURA RICHARDSON, California
RICHARD L. HANNA, New York ALBIO SIRES, New Jersey
JEFFREY M. LANDRY, Louisiana DONNA F. EDWARDS, Maryland
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN,
Tennessee

C O N T E N T S

----------
Page
Hearing held on March 9, 2012.................................... 1

WITNESSES

Mr. David R. Nicholson, Assistant Administrator for Finance and
Administration and Chief Financial Officer, Transportation
Security Administration
Oral statement............................................... 00
Written statement............................................ 00
Mr. Charles K. Edwards, Acting Inspector General, Department of
Homeland Security
Oral statement............................................... 00
Written statement............................................ 00
Mr. Stephen M. Lord, Director, Homeland Security and Justice
Issues, U.S. Government Accountability Office
Oral statement............................................... 00
Written statement............................................ 00

APPENDIX

Timeline of Congressional Request and Delay of the On-Site Review
of TSA's Transportation Logistics Center Warehouses............ 00
The Honorable Jason Chaffetz, a Member of Congress from the State
of Utah, Opening Statement..................................... 00

TSA OVERSIGHT PART IV: IS TSA EFFECTIVELY PROCURING, DEPLOYING, AND
STORING AVIATION SECURITY EQUIPMENT AND TECHNOLOGY?

----------

Wednesday, May 9, 2012,

House of Representatives,
Committee on Oversight and Government Reform, joint
with the
Committee on Transportation and Infrastructure,
Washington, D.C.
The committees met, pursuant to call, at 1:09 p.m. in room
2154, Rayburn House Office Building, Hon. Darrell Issa
[chairman of the Committee on Oversight and Government Reform],
presiding.
Present from the Committee on Oversight and Government
Reform: Representatives Issa, Cummings, Mica, Chaffetz,
Lankford, Farenthold, Gowdy, Buerkle, Connolly, Norton, Burton
and Guinta.
Present from the Committee on Transportation and
Infrastructure: Representatives Mica, Lankford, Farenthold,
Altmire, Cummings, Cravaack, Bucshon, Richardson, Norton,
DeFazio, Guinta and Hultgren.
Also Present: Representative Blackburn.
Staff Present: Thomas Alexander, Senior Counsel; Will L.
Boyington, Majority Staff Assistant; Molly Boyl, Majority
Parliamentarian; Sharon Casey, Senior Assistant Clerk; Adam P.
Fromm, Majority Director of Member Services and Committee
Operations; Linda Good, Majority Chief Clerk; Christopher
Hixon, Majority Deputy Chief Counsel, Oversight; Mitchell S.
Kominsky, Majority Counsel; Mark D. Marin, Majority Director of
Oversight; Laura L. Rush, Majority Deputy Chief Clerk; Jeff
Solsby, Majority Senior Communications Advisor; Rebecca
Watkins, Majority Press Secretary; Sang H. Yi, Majority
Professional Staff Member; Kevin Corbin; Minority Deputy Clerk;
Ashley Etienne, Minority Director of Communications; Jennifer
Hoffman, Minority Press Secretary; Carla Hultberg, Minority
Chief Clerk; Peter Kenny, Minority Counsel; Lucinda Lessley,
Minority Policy Director; and Dave Rapallo, Minority Staff
Director.
Chairman Issa. The Committee will come to order.
At the Oversight Committee, we exist to secure two
fundamental principles. First, Americans have the right to know
that the money Washington takes from them is well spent.
Second, Americans deserve an efficient and effective government
that works for them.
Our duty on the Oversight and Government Reform Committee
is to protect these rights. Our solemn responsibility is to
hold government accountable to taxpayers because taxpayers have
a right to know what they are getting from the government.
We work tirelessly in partnership with citizen watchdogs to
deliver the facts to the American people and bring genuine
reform to the Federal bureaucracy. This is our mission, this is
what we are here for today.
The way in which TSA has managed aviation security at our
Nation's eight airports raises numerous questions and concerns
regarding the stewardship of taxpayer dollars. Although a new
organization, you are not so new that you shouldn't have gotten
better by now. Too many Americans instead of delivering
effective security, believe that TSA has given Americans public
long lines and policies that hardly make us safer.
This is not to say that the 65,000 employees, particularly
those at the front lines who often find people frustrated when
they get to the head of the line, are to blame. Organizations
are not based on whether their workers are good or bad, they
are based on whether, in fact, their leadership is good or bad.
As we look at the Transportation Logistics Center in
Dallas, we find a flaw that it is easy to poke holes into, but
as we look at the 4,000 out of 65,000 TSA people who are here
in Washington making up rules, overseeing logistics and, in
fact, making many of the mistakes that have been noted in the
past by both our Committee and the Transportation Committee, we
realize there is a problem. The problem, for our purposes, will
primarily be seen as a failure to get organized in Washington.
Do I believe that TSA could do more with less? Yes. As we
look at various new technologies that cost hundreds of millions
of dollars, and we find them sitting not in the field but in
storage. In many cases, our audits show, through Chairman Mica
and my staff, that assets are brought back and languish there
for long periods of time until congressional investigators show
up. Then after weeks of delay and a few more hours delay, they
have been swept away.
That is exactly what you cannot do in an America that
depends on your Inspector General and your Congress to have
transparent ability to fairly evaluate needs for improvement.
I served in the military a generation ago. The name
Inspector General meant a great deal. Often people would have
to say, we have to get ready for the IG's inspection. That
meant training and preparation to pass a test. It did not mean
shoving things away, hiding them or making up new schedules of
what it would be on a certain day.
I remain concerned that since the TSA's creation in 2001
and as its workforce has grown from an initial 16,500
authorized, with 25,000 as its intended cap, the 65,000 people
working for TSA today represent too many people for too little
protection. Part of this is because of the failure to launch
effectively new technologies.
I, for one, was at the center of the dais, was here in
2001. I participated in the vote to create the TSA and I
participated in many, many votes that spent a great deal of
money. Literally, one could say we threw money at the problem.
It wasn't Republicans, it wasn't Democrats; it was a nation
that was concerned in a post-9/11 era that we had to act
quickly. We were more interested in effectiveness than
efficiency.
We are decade later. Today, we are looking at both
efficiency and effectiveness and we find both lacking at the
TSA. The idea that you get a good deal by buying more machinery
that simply decays or becomes obsolete during its presence in
Dallas makes no sense. Additionally, as a manufacturer, I am
well aware that if you want to take possession of assets, it is
much, much less expensive on these large pieces of equipment to
take possession at the factory and have them drop-shipped when
needed.
Logistically, there were failures; in oversight, there was
cover up; and in fact, a decade after the creation of TSA, we
are here today to question whether or not the management is
maximizing the hard work of the men and women of the TSA for
the benefit of the American people. That is why we are here
today. This is the fourth in a series and an unparalleled joint
effort by this Committee and the Transportation Committee.
I hope you have answers for the many questions today and I
hope this will serve as a reminder that in fact we will not
give up, on the Republican or Democratic side, until TSA
delivers a higher value for the American people.
With that, I recognize the Ranking Member for his opening
statement.
Mr. Cummings. Thank you very much, Mr. Chairman.
Earlier this week, the CIA reportedly thwarted an effort by
an al Qaeda affiliate in Yemen to blow up an airliner headed to
the United States using a new version of an underwear bomb. If
these reports are accurate, they are yet another testament to
the superb work of our intelligence and military officials in
our entire Nation's ongoing vigilance against terrorism.
This conspiracy also underscores the real threats that are
still directed against our Nation. We are engaged in an ongoing
battle to stay one step ahead of the terrorists. Just because
Osama Bin Laden has been killed and al Qaeda leadership has
been degraded does not mean we can rest.
As today's hearing highlights, part of our core defense
includes efforts by TSA to procure and deploy effective
security technology and equipment in our Nation's airports. In
recent years, however, the DHS Inspector General and GAO have
documented shortcomings in TSA's acquisition process in
individual procurements.
In 2006, for example, TSA deployed Explosive Trace
Detection Portals, commonly known as ``puffers,'' even though
initial tests suggested they might not perform in airports as
they had in laboratory settings. TSA later ended the program
and scraped the machines when they failed to perform adequately
in the field.
Similarly, after the attempted bombing of a Northwest
Airlines flight on Christmas Day, 2009, another passenger
screening technology, the Advanced Imaging Technology, was
rapidly deployed. GAO raised concerns about the testing and
performance of these machines before they were deployed. GAO
also raised concerns about their low usage after they were
deployed.
Finally, last month, GAO reported that TSA's Checked
Baggage Screening Program has never had a Department-approved
acquisition program baseline. This program, which initiated
eight years ago, has cost an estimated $49 billion through
2030. According to GAO, the program has already experienced
cost increases, but the absence of an approved baseline makes
it difficult to measure those increases against specific
benchmarks.
TSA's procurement challenges are similar to those of other
agencies. For example, during my tenure as Chairman of the
Subcommittee on the Coast Guard and Maritime Transportation, I
convened a series of hearings to examine the Coast Guard's
major procurements, including what was then known as the
Deepwater Program.
Early in this program, the Coast Guard spent millions of
dollars buying boats that literally did not float. Based on our
detailed oversight work, over many months, I offered
legislation to ensure that specific and detailed statutes would
guide Coast Guard procurement in the future. I am proud to say
that this legislation eventually became Title IV of the Coast
Guard Authorization Act of 2010.
I believe a similar effort may be warranted here and that
we should consider applying such statutes to the entire
Department of Homeland Security. In the meantime, I'm
encouraged that the Department has already taken some steps to
strengthen its management and oversight, starting with issuing
a new acquisition guideline directive.
This directive requires that each procurement follow a
standardized and rigorous process and it is intended to allow
progress through acquisition phases only after clear and
justifiable decisions are made at specific milestones. However,
no rules will be effective unless they are followed.
DHS awarded 88,000 procurement actions for $13 billion in
fiscal year 2010. The challenges that TSA has faced with its
aviation security systems are a result of the agency not fully
complying with DHS directives and DHS not insisting on TSA's
compliance. The Department and its agencies must be accountable
for their expenditures and that process starts by ensuring that
the Department and its procuring agencies follow their own
rules.
In a time when people are proposing even more extreme
measures to address TSA's challenges, I see a very simple
solution. Follow the protocols that have been established. We
have come a long way and we still have a long way to go, but we
now have an acquisition system in place that all DHS components
should follow. With today's hearing, I look forward to
understanding how and when TSA will reach this critical
milestone.
With that, Mr. Chairman, I yield back.
Chairman Issa. I thank the Ranking Member.
We now recognize the Chairman of the Committee on
Transportation and Infrastructure, the senior member of the
Oversight Committee, Mr. Mica, for his opening statement.
Mr. Mica. Thank you again, Chairman Issa, and also Mr.
Cummings, for agreeing to co-chair and be part of this
oversight hearing with the Transportation and Infrastructure
Committee, in our efforts to make certain that the American
public is safe and secure and we have in place the very best
security and transportation security system possible.
The subject today is, ``Is the TSA Effectively Procuring,
Deploying and Storing Aviation Security Equipment and
Technology?'' To that, I have to say absolutely they are not
doing that.
When we assumed the majority last year, we started looking
at the history of the acquisition of equipment during the past
four years and what was happening with important security
equipment. I think each of my colleagues has alluded to the
fact that aviation in this country is still at risk.
In the last 48 hours, we have seen that terrorists still
are targeting aviation because they know it can destroy our
economy. The question is, what is our primary agency that is
responsible for getting the latest technology, and dealing with
technology and spending taxpayer money on technology what are
they doing?
First of all, Mr. Cummings talked about the puffers. I
wanted to know where are the puffers? I went to Atlantic City
and saw the puffers. They didn't work when I went through them.
I had some trace on me, went through them multiple times and
they said, it was just a software glitch and it would be
resolved. Instead, they went forward buying puffers. They
bought puffers, they deployed puffers at great expense. What
happened to the puffers when they found they didn't work? They
sat in warehouses.
We started our investigation last year and they were still
sitting in warehouses for years at great expense to the
taxpayers. When we started the investigation, they finally took
the puffers, at a cost of $600 apiece, correct me if I am
wrong, and had the Department of Defense destroy them. In the
meantime, I want to know how much those puffers, sitting there
idly in that warehouse, cost the taxpayers and how much that
fiasco cost us.
Let us get current here. We had a whistleblower contact us
at the end of last year and the beginning of this year who said
there are incredible amounts of equipment sitting in a TSA
warehouse outside of Dallas, Texas. We started looking into it
and of course TSA gave us a hard time. Thanks to Mr. Issa, we
combined forces. We have one staffer who is with OGR, thank
you, and also with our Committee. We started investigating and
sure enough something was rotten in Denmark and Dallas. Denmark
is very close to Dallas in this case.
Here we get the whistleblower, we emailed at the beginning
of February that we wanted to do a site visit to Texas and they
put us off. They put us off for some time. I want this sequence
of time line of the requests and delays on the site visit made
a part of the record.
Chairman Issa. That will be made a part of the entire
record without objection.
Mr. Mica. In February, we asked to go down there. They put
us off. Finally, they asked for a delay. Then we found out, our
staff arrived there February 15, on the 13th through the 15th,
TSA was moving, we got word, 1,300 pieces of equipment. As our
staff is arriving, the equipment is going out the back door to
make certain congressional investigators don't see what is
there. What there was is equipment that had been sitting there
for I think over a year, some of it very important to the
security and safety of the people of the United States.
We have the equipment sitting there and we find out the
equipment was bought for certain purposes, very good purposes.
Some of that dealt with screening baggage and liquids. I won't
get into all the details and was supposed to have certain
performance standards. Then we find out the equipment is there
and TSA can't deploy the equipment.
These are pictures of this equipment. Here the country is
at risk, the United States is under threat and highly technical
equipment that is purchased, they don't know how to operate it
and they are storing it at great public expense. It is sitting
in these warehouses, 5,700 pieces of equipment were sitting
there.
I think this is outrageous. We are depending on this agency
to protect us, not to be storing equipment, buying it, not
meeting the specifications, not able to operate the equipment.
We will hear some from our witnesses today in more detail about
this outrage.
I thank you for holding this hearing. We need to get to the
bottom of why TSA is dancing this Committee, our joint
committees, around and not providing taxpayers with good return
for their dollars and security for the traveling public.
I yield back.
Chairman Issa. I thank the Chairman.
I understand the chairman of the subcommittee will be
submitting his for the record.
Without objection, all members will have seven days to
submit opening statements and related material for the record.
At this time, I would like to recognize our distinguished
panel of witnesses. Mr. David R. Nicholson is Assistant
Administrator for Finance and Administration and Chief
Financial Officer at the Transportation Safety Administration.
Mr. Charles K. Edwards, a very important returning witness, is
Acting Inspector General at the Department of Homeland
Security. Mr. Stephen M. Lord is Director of Homeland Security
and Justice Issues at the U.S. Government Accountability
Office, a part of this branch of government.
Pursuant to Committee rules, all witnesses must be sworn.
Please rise to take the oath.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth?
[Witnesses respond in the affirmative.]
Chairman Issa. Let the record indicate that all witnesses
answered in the affirmative.
In order to have time for discussion and knowing that in
about 20 or 25 minutes, we will have our first round of votes,
I would ask that you try to summarize your statements to the
five minutes. Your entire opening statements will be placed in
the record.
With that, I recognize Mr. Nicholson for five minutes.

WITNESSES STATEMENTS

STATEMENT OF DAVID R. NICHOLSON

Mr. Nicholson. Good afternoon, Chairman Issa, Chairman
Mica, Ranking Member Cummings and distinguished members of the
committees. Thank you for the opportunity to testify today.
As intended in the Aviation Transportation Security Act,
TSA remains vigilant in ensuring the security of people and
commerce flowing through our transportation networks. The
nature of our counter-terrorism work has driven changes. TSA
employs risk-based, intelligence-driven operations to prevent
terrorist attacks and to reduce the vulnerability of the
Nation's transportation system to terrorism, and provide the
most effective security in the most efficient manner.
We continue to revolve our security approach by examining
procedures and technologies we use and how screening is
conducted. To date, TSA conducts security operations at about
450 airports divided into six regions, 26 Federal air marshal
field offices, we have a 7 by 24 national operations center and
two vetting centers with credentialing enrollment centers
throughout the country.
We have a systems integration facility and a logistics
facility, a Federal air marshal training center and our
headquarters is located in Arlington, Virginia. We have over
15,000 pieces of checkpoint and baggage screening equipment at
our airports. Our 37 Viper teams provide a deployable
capability ready to respond to intelligence and provide the
capability for protecting or restoring transportation security.
In our international programs, we have 29 TSARs in 19
countries covering 100 international governments. We also have
920 canine teams and law enforcement agreements with 300 local
law enforcement authorities.
To meet our transportation security responsibilities
requires flexibility and involving our personnel capabilities,
processes and employment of technology to screen about 1.7
million passengers and their property each day.
You have heard about our risk-based security initiatives
like TSA PreCheck which has screened over 1 million passengers,
and new procedures for screening children and people over 75.
To meet our security requirements, TSA must be able to
rapidly deploy technology in response to changing threat
information or have equipment ready to deploy when airport
facilities are changed to accommodate the equipment.
Approximately 85 percent of our screening equipment is being
used in the field and 15 percent is in warehouse either for
deployment, redeployment or scheduled for disposal.
After security equipment successfully clears a multifaceted
testing regime, TSA fulfills several requirements prior to its
use in an airport setting. These requirements include
developing estimates of how much equipment is needed and
building a schedule for deploying individual pieces of
equipment at airports around the country.
Coupled with the manufacturing schedules and companies that
produce our equipment, TSA typically procures equipment ahead
of scheduled deployments so that it is immediately available
when the airport is ready to receive it. Preparedness includes
facilities preparation and a trained workforce at the
appropriate staffing level.
To store transportation security equipment prior to
deployment, redeployment or disposal, TSA leases three
warehouses in Texas. Nearly 80 percent of the screening
equipment procured by TSA has been stored in warehouses for
less than a year. The reported gross value of our security
equipment in the warehouse, as of March 31 is approximately
$155 million or 5 percent of the value of all of our security
equipment.
In the past two years, by working directly with warehouse
owners and awarding warehouse operations contracts to a
service-disabled veteran-owned small business, we have reduced
our cost to $3.1 million annually or 2 percent of the value of
the equipment just located in the warehouse.
In a report published in November 2009, the DHS Inspector
General reviewed TSA's management of the Logistics Center. TSA
worked closely with the IG to quickly implement the three
recommendations made in the report. As a result, these
recommendations have been closed. Since this report closed, TSA
has continued to build on those recommendations to streamline
our equipment deployment, storage and disposal. As a result of
these efforts, TSA is planning to close one of the three
warehouses within the next year.
Thank you for the opportunity to appear before you today
and I am happy to answer any of your questions.
[Prepared statement of Mr. Nicholson follows:]

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Chairman Issa. Thank you.
Mr. Edwards.

STATEMENT OF CHARLES K. EDWARDS

Mr. Edwards. Good afternoon, Chairman Issa, Chairman Mica,
Ranking Member Cummings, and distinguished members of the
committees. Thank you for the opportunity to testify today on
the Transportation Security Administration's procurement,
deployment and storage of airport security-related equipment.
My testimony today will focus on our November 2009 audit
report titled ``Management of Transportation Security
Administration's Logistics Center,'' which evaluated the
efficiency and effectiveness of TSA's deployment, redeployment
and disposal of transportation security-related equipment.
Our audit concluded that because TSA did not have formal
guidance and procedures to ensure periodic review and proper
classification of inventory, it was unable to efficiently
deploy, redeploy and dispose of transportation security
equipment through its Logistics Center. As a result, the agency
had potentially lost equipment utility and did not have
accurate accounting of its inventory.
We learned that the equipment was sent to a warehouse,
assigned a condition code and never reviewed again to ensure
its utility. TSA's systems did not include an accurate
inventory of items available for use; did not allow TSA
management to make informed deployment; redeployment and
disposal decisions, and did not ensure TSA disposed of
equipment that was no longer needed. We recommended TSA
periodically review its inventory to make sure equipment is
correctly classified.
We also found that TSA did not always deploy new equipment
efficiently or resolve deployment delays. In some instances,
new equipment was stored for years before TSA personnel
designated an airport to receive it. For example, eight
explosive detection systems units, worth about $7 million, were
stored for two years.
At the time of our audit, airports had been identified to
receive seven of the units. Additionally, 345 EDT units, worth
about $10.6 million, had been stored for one to two years or
longer. The equipment deployment had been delayed because until
that time, TSA did not have written transition plans for the
units.
We recommended that TSA develop, implement and monitor
procedures for the efficient deployment, redeployment and
disposal of all transportation security-related equipment
through its Logistics Center.
Our audit also revealed TSA was not redeploying equipment
effectively. TSA did not assess the condition of used equipment
in a timely manner to determine whether to redeploy or dispose
of units. For example, as of January 2009, used equipment,
including conveyors worth about $4 million, had been stored at
the Logistics Center for one to two years or longer.
Finally, TSA did not efficiently dispose of excess
equipment because the agency did not have consistent guidance
for disposal. Although TSA began developing a disposal plan in
May 2005, the first actual disposal did not take place until
late 2008. The delay was due to difficulty in establishing an
agreement with a government entity that could properly destroy
sensitive national security equipment and review hazardous
material disposal requirements.
The space required to store the growing inventory of new,
used and excess equipment contributed to TSA's decision in
fiscal year 2009 to lease an additional warehouse at a cost of
$2 million. We recommended the agency develop a recurring
process to redeploy or dispose of any excess equipment at the
Logistics Center.
TSA concurred with all three of our audit recommendations
and has taken corrective action in all three. We have closed
the recommendations as implemented.
In conclusion, the Office of Inspector General remains
committed to identifying issues and making recommendations to
assist TSA in carrying out its mission effectively and
efficiently.
Messrs. Chairmen, this concludes my prepared statement.
Thank you for the opportunity to testify and I welcome any
questions from you or the members of the Committee.
[Prepared statement of Mr. Edwards follows:]

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Chairman Issa. Thank you, Mr. Edwards.
Mr. Lord.

STATEMENT OF STEPHEN M. LORD

Mr. Lord. Good afternoon, Chairman Issa, Chairman Mica,
Representative Cummings, and other distinguished members of the
committees. I am pleased to be here today to discuss DHS and
TSA's broader efforts to develop and field new screening
technologies.
This is an important issue as these technologies represent
billions of dollars in life cycle costs and are an integral
part of TSA's layered approach to aviation security. Today, I
would like to highlight some of the key insights gleaned from
our prior work. I summarize those as three.
First is the importance of defining clear program
requirements. Secondly is overseeing and testing new
technologies. Thirdly is developing reliable and accurate
acquisition program baselines to help gauge progress as an
acquisition unfolds.
Regarding requirements, our past work has highlighted the
importance of setting clear requirements at the program's
start. Otherwise, you run the risk of having poor program
outcomes further down the path or increased costs. For example,
in June 2010, we reported that over half of the 15 DHS programs
reviewed initiated acquisition activities without required
approval of key requirements or planning documents. Obviously,
this issue is broader than TSA alone.
We also found that TSA has faced challenges related to the
requirements setting process. For example, we found that TSA
did not fully follow acquisition policies when acquiring
advanced imaging technology or body scanners which resulted in
DHS approving the scanners for deployment without full
knowledge of their capabilities.
We also reported that TSA revised requirements for its
check baggage screening systems in 2005 and again in 2010
without a clear plan that will ensure the machines were capable
of meeting the requirements. TSA did agree with our
recommendations to address these issues and has begun taking
action to address them.
Regarding my second point, the importance of testing, our
prior work has identified several challenges related to testing
which can lead to problems down the road in the acquisition
process. For example, in January, we reported that TSA began
deploying AIT machines before it received formal approval for
how it would test the machines.
Specifically, DHS approved AIT deployment in September 2009
but did not approve the very important Testing and Evaluation
Master Plan, or TEMP, until January 2010, after the decision
had already been made to deploy the machine.
We also identified some testing issues in our report on
TSA's baggage screening system. We found that TSA was trying to
collect explosive data at the same time it was procuring new
machines, not to say it couldn't be done but it was a high risk
strategy which led to some delays in the acquisition process.
Thus, we recommended that TSA collect the needed data first
before starting the procurement process for new machines.
Our prior work has also highlighted the importance of
establishing reliable program baselines, schedules and cost
estimates. For example, as was alluded to earlier, we found
that TSA's Electronic Baggage Screening Program has not had a
departmental approved acquisition program baseline since the
inception of the program more than eight years ago. This is for
one of DHS' largest acquisition programs.
TSA reports that it hopes to submit an approved version in
time for the next ARB meeting in July 2012. Just for the
record, they have made two prior attempts, so it is not that
they are not trying but the baseline submitted didn't meet
departmental level requirements.
In response to our AIT report, TSA also agreed to develop
an AIT roadmap or schedule to help decision makers gauge TSA's
progress in meeting new performance requirements. We think that
is an important part of the process as well.
In response to these and other challenges we have
identified, not only at TSA but other components, DHS has taken
some additional steps to strengthen the Department's
acquisition processes. For example, they have established a new
Office of Program Accountability and Risk Management, PARM.
This office will reportedly work with DHS leadership to assess
the health of major acquisitions and investments and provide
new tools to increase the information flows between the
Department and the various components.
In closing, our past work has highlighted the importance of
adhering to DHS acquisition processes to achieve better
outcomes, transparency and accountability. Doing so will help
ensure taxpayer funds are used wisely.
Mr. Chairman, this concludes my statement. I look forward
to your questions.
[Prepared statement of Mr. Lord follows:]

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Chairman Issa. Thank you, Mr. Lord.
I now ask unanimous consent that my colleague from
Tennessee, Mrs. Blackburn, be allowed to participate in today's
hearing. Without objection, so ordered.
I will now recognize myself for five minutes.
Mr. Nicholson, are you concerned with the fact that TSA's
Office of Legislative Affairs may have provided inaccurate,
incomplete and potentially misleading information to Congress?
Mr. Nicholson. No, sir.
Chairman Issa. You are not concerned?
Mr. Nicholson. No, sir.
Chairman Issa. If you learned that in fact, TSA's Office of
Legislative Affairs provided inaccurate, incomplete or
potentially misleading information to Congress concerning
financial management at TSA, what would you recommend that the
Administrator do?
Mr. Nicholson. If I learned that someone purposely provided
incorrect information, then I think the Administrator should
hold those people accountable under our professional
responsibility program.
Chairman Issa. Then I propose to you my staff was given
documents which were not accurate as to the day they were
given, but in fact, were a projection of what you would shove
out the backdoor in the days before they came in. I would
propose to you that we have the ability to criminally refer
that, criminally refer that as lying to Congress.
Now, will you look at what was in the warehouse,
investigate, and I know that the IG would be happy to help you,
what was in the warehouse as of the day the information was
given and in fact, as we were delayed going in, that material
was being taken out so that on the day our people went in, it
would match it but did not fairly and accurately relate to the
amount of material that was there subject to our inspection and
our fact finding.
Mr. Nicholson. Sir, we would be happy to look at those time
lines and when the meeting was scheduled, how it was scheduled,
what the inventory consisted of, what the dates were and what
the nuances.
Chairman Issa. Do you believe that not giving an inventory
of what was in the warehouse on the day it was given but what
was going to be there after over 1,000 pieces were removed is
misleading Congress?
Mr. Nicholson. I don't believe that happened.
Chairman Issa. It did happen. Your IG is shaking his head.
I want you to understand, Congress was mislead, our staff was
deliberately given a document that as they delayed an ordinary
appearance, by the way, not one in which we were going to count
but simply an ordinary appearance, they were given a document
that deliberately was lower than the amount that was there on
the day it was given and in fact, stuff was being shoved out.
People were brought in at I believe 5:00 a.m. so they could
get it out before our people came in. That is something we
believe we can make a case for. Will you agree here today to
take action and tell us what is going to be done about it while
we consider whether it rises to the act of a criminal deception
of Congress?
Mr. Nicholson. We will be happy to look into this.
Chairman Issa. I appreciate that.
By the way, Mr. Lord, as you were going through the
additional group being layered on to create communication
between an already bloated group, I could only think of a GSA
conference in Las Vegas that perhaps adding additional layers
would beg additional conferences.
Mr. Nicholson, I am going to stay with you a little bit.
You gave us a lot of figures and I appreciate that but let me
just ask you the basic question. Do you think that by buying
and storing equipment well in advance, you are minimizing the
cost to the American taxpayer or your procurement procedures
need to be tightened, more or less a yes or no there?
Mr. Nicholson. I think there is always room for improvement
in our procedures. I think we have taken many steps over the
last few years and I think we have a good employment plan and
implementing.....
Chairman Issa. Can we have the picture of the office stuff?
If you could put up the picture of the office supplies? Do you
recognize that type of equipment?
Mr. Nicholson. From what I can see, it looks like tables
and perhaps some terminals.
Chairman Issa. I am going to pose a question to you, a very
simple one. What idiot thought that moving that kind of
equipment back and forth around the Country made any sense? Are
you aware that the GSA and other organizations already exist to
take that kind of equipment off your hands? It doesn't appear
to be sensitive, it doesn't in any way, shape or form justify
moving it from San Diego or somewhere like there to Dallas.
I might suggest you start with that. It might be a small
amount of money but the basic concept that you are going to use
a central warehouse for office supplies flies in the face of an
established General Services Administration system that
disposes of every Congressman on the dais' excesses when we
have it and that you at least limit those 700,000 feet to
unique and sensitive material.
Mr. Lord, I have just one more question with my remaining
time.
The GAO previously reported that it was unclear whether the
advanced imaging system would have discovered explosives
similar to those used by the Christmas Day bomber. Just
yesterday, Secretary Janet Napolitano said there is a high
likelihood that advanced imaging technology would have detected
the new, sophisticated underwear bomb attempted to be used in
the recent plot in Yemen. Do you agree that there is a high
likelihood that advanced imaging would have caught the new
bomb?
Mr. Lord. That is a very interesting question. I would have
great difficulty answering that in open session, sir. We have
done a classified report. We can provide information related to
that question. I would be happy to brief you in closed session.
Chairman Issa. We will take that and I am going to predict
that it will be no, they couldn't, but the actual answer will
remain classified.
With that, I recognize the Ranking Member for his
questions.
Mr. Cummings. Thank you very much, Mr. Chairman.
Mr. Edwards, I have always been very sensitive in this
Committee, or any committee, when criminal activity is alleged.
The Chairman is rightful to be upset about this situation and I
am very upset about it, but he said something I just want to
make sure we clear up. He said you were shaking your head and
you were shaking your head. Do you remember when he said that
just a minute ago and it implied that you were in disagreement
with Mr. Nicholson. It was at a very critical moment. He was
asking about criminal activity. I was just wondering, why were
you shaking your head? I have to hear you because this is
important.
Mr. Edwards. I am just listening to the question, sir.
Mr. Cummings. You were in disagreement or what? I want to
understand because the implication was that you were not
believing what he was saying. That was the implication.
Mr. Edwards. No, I am just listening to the question, sir.
Mr. Cummings. You need to watch your head then.
Effective and efficient oversight of Federal acquisitions
is a critical task for this Committee and Congress. It is a
long term task and requires diligent review of each stage of
what can an extremely complex process. One of the most crucial
steps in any procurement should be the establishment of the
acquisition program baseline. According to DHS' own acquisition
manual, this is essentially the contract between the Department
and the procuring agency against which future performance will
be measured.
Mr. Lord has written in his testimony that program
performance cannot be accurately assessed without valid
baseline requirements established at the program start. I
completely agree with that, Mr. Lord.
The Coast Guard acquisition legislation I offered prohibits
the Coast Guard from beginning to obtain assets under Level 1
and Level 2 acquisitions until the Coast Guard provides several
things to Congress. These include key performance parameters
for acquisitions, a detailed schedule and program baseline and
acquisition unit costs.
Mr. Nicholson, it is my understanding TSA currently has
seven Level 1 acquisition programs. How many of these have
Department-approved acquisition program baselines?
Mr. Nicholson. Sir, I believe on the acquisition program
baselines, I believe the Department has approved one and we
have scheduled others.
Mr. Cummings. Shouldn't you have those things already?
Mr. Nicholson. Yes, sir.
Mr. Cummings. Why don't you?
Mr. Nicholson. The Department's program to come in to have
the ARBs, to establish and approve those ARBs happened well
after the start of most of our programs. Within the agency, we
did hold our own ARBs. We established them and I think it is
proper to refresh those and have them done and affirmed or
modified by the Department as part of their process.
Mr. Cummings. I understand some of your Level 1 programs
have TSA-approved acquisition baselines but they have lacked
DHS-approved baselines for more than seven years. That is seven
years of spending without an approved acquisition plan. That is
more than four years of spending since DHS issued its new
acquisition management directive in 2008.
I know that each program is unique and many predate the
2008 acquisition directive, but why do so many TSA Level 1
acquisitions lack Department-approved program baselines?
Mr. Nicholson. We just need to get in the queue and get
those approved by the Department under the new process.
Mr. Cummings. That is not good enough. That is good enough.
We have to do better than that. What steps are being taken to
ensure the Department reviews and approves baselines for these
programs?
Mr. Nicholson. We have scheduled meetings with them, we
have provided the documentation to them and they review those
as part of our input into the programs and analysis that the
new Office of PARM has set up to perform.
Mr. Cummings. Mr. Lord, I understand the GAO is currently
reviewing all of TSA's Level 1 acquisition programs. Can you
explain why TSA has so many Level 1 procurements that have
lacked program baselines and what steps TSA is taking to ensure
that the baselines can be approved by the Department because it
sounds like this is one of them I blame you, you blame me and
nobody gets it done.
Mr. Lord. I think you need to look at two levels. The
Department level, it is a shared responsibility and DHS needs
to take ownership of some of the requirements. It is not
sufficient to simply issue a new framework; you have to monitor
component adherence to it and take additional steps to ensure
the necessary meetings, paperwork and discussions take place.
I am concerned about that because again, the acquisition
program baseline is the key document that outlines what the
program is going to cost, when it is going to be fielded and
what technical performance it is going to deliver. If you don't
have that up front, how are you going to gauge progress over
the length of the program.
Mr. Cummings. Mr. Lord, what specific steps does DHS need
to take to ensure its component agencies comply fully with its
acquisition directives and by what date will this be
accomplished? Can you tell us that?
Mr. Lord. I think, first of all, to their credit they have
implemented some new guidance, clarified some of the existing
rules. We found there was some confusion at the TSA level about
what the actual requirements were because the requirements
changed. I think they have clarified that. They have given new
training, they are hiring more acquisition professionals, so it
is a difficult nut to crack but hopefully, over the longer
term, they will be more successful. Again, that is a key
deficiency, not having a departmental-approved acquisition
program baseline.
For your Level 1, just so everybody knows, those are your
major programs. That is when the life cycle costs exceed $1
billion.
Mr. Cummings. Thank you, Mr. Chairman.
Chairman Issa. Thank you.
We now recognize the Chairman of the Transportation
Committee, Mr. Mica, for his questions.
Mr. Mica. Mr. Nicholson, have you seen this report that we
published November 16 that was the 10th anniversary of the
passage of the TSA legislation?
Mr. Nicholson. Yes, sir.
Mr. Mica. You have seen it?
Mr. Nicholson. Yes, sir.
Mr. Mica. Are you one of the people that said publishing
this report was a disservice to TSA?
Mr. Nicholson. I have not heard that said.
Mr. Mica. Your communications folks, when Mr. Issa and I
produced this report, said this is a disservice to TSA. I
remember very clearly and I wrote the Administrator back and I
thought it was a disservice for him to ignore what we had
outlined.
In that report, we went through TSA's failing to develop
and deploy effective technology. Back then, Mr. Issa, we said
TSA warehouses are at near capacity, we were correct there,
containing almost 2,800 pieces of screening equipment. Little
did we know there were 5,700 pieces of screening equipment
sitting there that again you delayed and actually diverted our
investigators from going down there, moving the stuff out in
the middle of the night before they arrived after delaying
them.
You need to go back and look at this report because it is
not meant to demean TSA, but to better define the mission to
look at the gaps. We think we did a fairly thorough job. We
will continue to take each part of this, Mr. Issa and I, apart
and we will send our investigators down until we somehow make
some sense out of this agency.
When you are procuring billions of dollars worth of
equipment, it is sitting in warehouses, some of it for over a
year. Listen to this. First of all, the Committee investigators
discovered 85 percent of the transportation security equipment
currently warehoused there has been stored for longer than six
months; 35 percent of the equipment had been stored for more
than a year.
First, there was a 2008. Here is advanced imaging
technology sitting in that center since August 4, 2008. The
next page is explosive detection system. I don't know exactly
which one it was but people within the last 48 hours are trying
to take our lights out and advanced explosive detection system
equipment has been sitting there since December 12, 2010. Are
you aware of this, sir?
Mr. Nicholson. I am not aware of this.
Mr. Mica. You are not aware of this? Well, somebody needs
to get aware. This is hundreds of millions. The advanced
imaging technology was a half a billion dollar acquisition of
which they bought equipment, for which we still don't have
people that are trained, we don't operate it.
Yesterday I was briefed in a closed door briefing on the
performance, of looking at specifically, and this was scheduled
before all of this came out. We have had the General Accounting
Office test the system and Mr. Issa and I will continue to do
it, but we have seen the failure. Somebody needs to see the
failures both in acquiring equipment, deploying equipment and
making sure equipment is not sitting in a warehouse idle when
people are trying to take our lights out.
Don't you think that is a reasonable request, sir, that we
have you act and make certain that this equipment, one is four
years, the other is two years, that it is properly deployed or
something is done with it? The puffers, we stopped paying for
the rental after years of having it in those warehouses. It
would still be sitting there if we hadn't done something about
it.
Mr. Nicholson. Sir, I can tell you as I started to say, the
EDS, I am not sure which unit that would be and what type. The
EDS would be for electronic baggage. The AIT picture, given the
date, would have to be a pilot unit from a program that we had
several years ago because we didn't make our purchase of AIT to
deploy in the primary screening area until much later in time
after 2008 following the events of Christmas Day, 2009.
Mr. Mica. Again, the procurement process is a disaster. We
just heard we are buying things we haven't properly vetted. I
do not think any of the advanced imaging technology was
properly vetted, in fact, I know it wasn't vetted. I know we
could have bought the stick equipment with the image that
wasn't offensive. Now you are going back and vetting and
testing the stick equipment rather than the invasive equipment
that you deployed.
We have an agency in which we had no Administrator for over
a year and an agency that has turned out to be more
dysfunctional than anyone would have anticipated. Somebody has
to get control of this. With 65,000 employees, nearly $8
billion in expenditures, 14,000 administrative staff, it has
reached critical mass. The taxpayers are not going to put up
with it anymore.
I yield back.
Chairman Issa. I thank the gentleman.
I ask unanimous consent I be able to ask one quick question
to follow up on the Ranking Member. Without objection.
Mr. Edwards, as Inspector General, if it was done,
deliberately moving equipment out and changing what was
actually in the warehouse, essentially rigging something for an
IG inspection, if this was the military Inspector General, you
take all your excess equipment, you run it somewhere so you can
fit a certain requirement, isn't that normally something for
which there is disciplinary action if an IG discovers that
essentially things have been moved out in anticipation of an
IG's inspection or anyone's inspection?
Mr. Edwards. If an allegation or if something is brought to
our attention and it is perceived to be in that nature, then we
would definitely do an administrative investigation and refer
it to management for appropriate action.
Chairman Issa. Thank you. I appreciate your indulgence.
We now go to the gentleman from Virginia, Mr. Connolly, for
five minutes.
Mr. Connolly. Mr. Chairman, before my clock begins, may I
just inquire of you?
Chairman Issa. Of course.
Mr. Connolly. Was this panel sworn in?
Chairman Issa. Yes, they were.
Mr. Connolly. I thank the Chair.
Mr. Nicholson, you are under oath. In response to the
Chairman's question, did I understand you to deny any and all
awareness of the fact that equipment may have been moved in the
warehouses in question in order to conceal information from
congressional staff or Congress itself?
Mr. Nicholson. Sir, you understood me to say that I have no
information that that was done.
Mr. Connolly. Are you aware of the fact it was done?
Mr. Nicholson. I don't believe it was done.
Mr. Connolly. Your position is?
Mr. Nicholson. My position is that we have disposals that
happen at our warehouse in the three to five month range each
year. Those disposals take place and the email traffic I think
will be part of the record will show that this disposal
schedule was started in the first quarter of fiscal year 2011.
There were several back and forths scheduled for it. The
disposal was scheduled to take place the 13th through the 17th
of February and the disposal took place as it was scheduled. It
was scheduled and it was attempted to be scheduled several
months before.
Mr. Connolly. Congressional staff happened to be visiting
the facility and it was coincident with that scheduled moving
out of equipment, is that correct?
Mr. Nicholson. Yes, sir. I think the letter we received
from the Committee that was signed on the 6th of February
suggested dates of 14 or 15 February and the response we gave
was 15 February would be fine.
Mr. Connolly. Mr. Edwards, nothing came to your attention
in the IG's office with respect to this matter?
Mr. Edwards. No, sir, nothing came to us.
Mr. Connolly. So this is news to you?
Mr. Edwards. Yes, sir.
Mr. Connolly. Thank you.
Mr. Nicholson, at our previous hearing on TSA, we cited the
abysmal record of turnover at TSA and one of the reasons
attributed to it was, the Partnership for Public Service's Best
Places to Work Survey, which surveys 241 Federal agencies and
entities, TSA ranked 232nd out of 241. Mr. Chairman, maybe we
should hold hearings on the other nine some day to find out
just how bad things can get.
Chairman Issa. What does it take to get to the very bottom.
Mr. Connolly. Exactly, what does it take.
To what do you attribute such incredible turnover because
one looks at working conditions, one looks at management, one
looks at compensation. Part two of my question is, and I would
like Mr. Lord to comment on this as well, we can't, especially
in light of the recent announcement of yet another permutation
on a terrorist attempt to take on an airplane, we know we can't
simply rely on technology. We need trained eyes and trained
minds to recognize something looks funny and true judgment
needs to be exercised in order to protect the public on
occasion.
I am deeply concerned, as I know you must be, that given
the turnover and the low morale, that has to impinge on that
key set of skills we need deployed on behalf of American
security.
Mr. Nicholson. Sir, I can give you a couple of comments on
that with respect to our transportation security officer
workforce. I don't have the exact numbers but I seem to recall
it is somewhere above 60 percent of our people have served over
5 years in the agency, so we have good retention of a core
group of people.
The attrition rate that we have today I think is about 7
percent, so there is marked change in attrition over the years.
The surveys do show some of the things that you mentioned with
respect to where TSOS started but we do know the year before
TSA stood up, the industry was recording over 100 percent
turnover so they hired essentially two people for the same job
every year, so we have made significant progress in that.
We do get overwhelming positive responses in the nature of
the work and dedicated to the mission. I think the focus of our
people on the front line to your point are people focused on
security and protecting the American public. I think the
surveys have borne that out at least in the minds of our
transportation security officers.
Mr. Connolly. Mr. Lord?
Mr. Lord. I just want to point out we have ongoing work
looking at DHS morale issues. I would argue that it is an issue
that cuts across the entire department. I don't have any unique
insights offers today because our work is not completed, but in
general, TSA has a difficult task. They are screening 1.7
million passengers per day. Some passengers are in a hurry,
some are grumpy. It is a challenge in some cases.
Mr. Connolly. Conceding it is a challenge, Mr. Lord, but
the question is, given relatively low morale by any measurement
and historic high turnover, although improvements have been
made, is there reason to believe, from your professional
perspective, that that could impinge on the ability of the
agency through its personnel to sort of stay attuned to the
human factor as opposed to relying machines to catch it?
Mr. Lord. I think you need a dedicated and alert workforce
given the issues you are dealing with but again, I am not sure
what the root causes are and we have a team looking at that. It
is not being led by me, I should add. It is being led by
another GAO executive.
Mr. Connolly. Thank you, Madam Chairman.
Ms. Buerkle. [Presiding] I thank the gentleman.
The Chair now yields five minutes to Mr. Chaffetz from
Utah.
Mr. Chaffetz. Thank you.
Mr. Nicholson, the current inventory TSA has is somewhere
between $185 million and $200 million, is that correct?
Mr. Nicholson. The inventory in the warehouse as of the
March 31 was about $155 million. It has dropped as of the end
of April. I don't have the exact figure.
Mr. Chaffetz. The inventory sheet that you gave the United
States Congress, why did that not account for things that were
in the disposal process?
Mr. Nicholson. I am not sure, I haven't seen the sheet, so
I am not sure.
Mr. Chaffetz. You are the CFO, you are having a hearing
about this topic and you are telling me you haven't seen the
inventory sheet?
Mr. Nicholson. No, sir. I don't normally look at the
inventory sheets for our warehouse on a month to month basis.
Mr. Chaffetz. Who would look at that? You are the CFO of
TSA and we are talking about hundreds of millions of dollars.
You don't look at that?
Mr. Nicholson. The person who oversees the warehouse has
the inventory sheet. I get a monthly printout as part of our
financial statement.
Mr. Chaffetz. Maybe we are getting to the heart of the
problem and with thousands administrators along the way, we
would expect somebody at your level and certainly if we are
having a hearing about this, we would expect the TSA to provide
that type of person.
Let me ask you another question. How many bomb sniffing
dogs do you have in the inventory, in the warehouse, how many
extra ones do you have?
Mr. Nicholson. We have no canines in the warehouse, sir.
Mr. Chaffetz. You have spent hundreds of millions of
dollars on whole body imaging machines that cost about $175,000
apiece. Dogs, fully trained, are about $30,000. How many of
these whole body imaging machines have you been requested to
provide to either the White House, Iraq or Afghanistan?
Mr. Nicholson. Sir, first I would like to say the amount of
money we spend for technology for all of the AITs, including
the 200 that we just purchased about two weeks ago, is about
$159 million.
Mr. Chaffetz. This most recent purchase was how many
dollars?
Mr. Nicholson. $30 million.
Mr. Chaffetz. $30 million, and you still have some in
inventory and we don't know that they necessarily work.
Let me ask you, if we were to take an improvised explosive
device and strap it to your groin area and you didn't want it
to be detected, would you much rather walk by a bomb sniffing
German Shepherd or through a whole body imaging machine?
Mr. Nicholson. I would not want to walk past either,
especially if the canine team was properly certified.
Mr. Chaffetz. I find it fascinating that only the TSA seems
enthralled with these machines. I go visit the White House, I
have been to Iraq, I have been to Afghanistan and I have never
seen a whole body imaging machine in some of the places we need
the highest level of security but I do routinely see dogs, bomb
sniffing dogs. When we have the State of the Union, arguably
one of the most secure events this Nation has, they don't bring
in whole body imaging machines, they bring in dogs.
What frustrates me about the TSA is that we know, based on
what we have done at the Pentagon, when they stood up JIED,
joint improvised explosive device, we put a General in charge
of it, they spent $19 billion figuring out to find these
improvised explosive devices and their conclusion was, the
single best way to find a bomb is through a dog, a bomb
sniffing dog.
This TSA and this Administration continues to deny the
opportunity to secure these airports to the fullest extent that
they can by purchasing these machines that we have questions
about whether or not they even work. The threat from terrorism
is real. We are not messing around. People want to kill us and
people are going to die if we continue to play games, put
hundreds of millions of dollars in equipment in warehouses not
to be used, we don't even know what that inventory is, and we
refuse to invest in dogs and canines that are mobile. They can
detect things from everything from the parking lot right up to
the gate and on the airplane themselves.
It is what the Israelis do, it is what the Pentagon does,
it is what the White House does. It is what we do in the United
States Congress. Yet, only the TSA decides that whole body
imaging machines are better and then we stick hundreds of
million dollars of them in the warehouse. People are going to
die if we continue to make these asinine decisions.
It is so frustrating to see what is happening and then to
basically get a document that is totally inaccurate presented
to the United States Congress to try to cover this up while we
have thousands of administrators out there, we shouldn't be
investing in more administration and opening a new office so we
can communicate better. Go get the dogs. That is how we are
going to secure these airplanes and thwart these terrorists
that want to try to kill us.
I yield back.
Ms. Buerkle. I thank the gentleman.
The Chair will not recognize the gentleman from Oregon, Mr.
DeFazio.
Mr. DeFazio. Thank you.
I have just one question about the newly acquired,
automated AIT. What are you doing about the false alarm
problem?
Mr. Nicholson. We are looking at the false alarm problem to
make sure it fits within our standards. Right now it does fit
within our standards. What we are concerned as we make the
improvements to the technology.
Mr. DeFazio. I wonder what that standard is. What percent
of false alarms do you allow? I conducted a little experiment
just for fun. I wore identical clothes through San Diego last
Friday and Eugene, Oregon on Monday, absolutely identical, I
took the underwear home and washed it, so nothing changed.
I went through the remote operator body scanner in San
Diego and since I know what not to wear, no problem, go right
through. In Eugene, for the fourth week in a row, brand new
technology, I have to get patted down, identical clothing. Then
I stood there and watched and of the next 15 people who went
through that machine, 12 had to be patted down. Doesn't that
seem like a pretty high false alarm rate because they were all
false alarms?
Mr. Nicholson. Sir, I would have to check into that. I
don't know the exact answer to your question.
Mr. DeFazio. Okay. I did talk to the regional administrator
and he admits that they have a little problem with the
software. There is new software being developed because it
can't deal with clothing. If you are wearing pants that are
little heavier than normal, like jeans, alarm; wearing socks
and pants, alarm because he has socks and pants on and wearing
a collar, alarm.
Because we are so uptight in this country that we couldn't
look at the fuzzy, black and white images of bodies and have
something that perhaps is more effective and false alarms less,
we have now gone to this dumb downed machine or hastily
acquired machine which apparently, at least from my
observations, false alarms a tremendous amount of the time.
Basically, I believe if you get a lot of false alarms,
after a while, it is like this thing false alarms all the time,
then I think the screeners are going to lose their
attentiveness to find a real threat.
Mr. Nicholson. I hope that your experience is not shared
and I would be happy to take that up and look into it.
Mr. DeFazio. I am told that it does have a problem and they
are developing new software, but the question would be why did
we deploy them and we are using them as standalones with this
problem. My observation is you are actually requiring more
personnel because you have so many false alarms as opposed to
we are saving, we don't have to have a remote operator anymore.
It seems to me an acquisition problem. We should have had
people wearing different thicknesses of clothing testing these
things and had some sort of parameter on how many false alarms
we should tolerate.
On the inventory, there is the Advanced Technology AT2s,
472 of them. Does every airport in America now have AT2s for
carry-on bags?
Mr. Nicholson. No, sir, they don't. I am not sure of the
date of the inventory, I don't have the report available.
Mr. DeFazio. I am just looking at the report the
Republicans provide, but if there were 472 sitting there,
basically this is pretty much a simple replacement, doesn't
require much reconfiguration of the airport, they are a much
better technology, have faster throughput and are more
accurate. We really shouldn't have 472 of them sitting in
inventory, should we?
Mr. Nicholson. I think we have 157 in inventory and about
23 of those are in our safety stocks. At least 23 will remain
in inventory unless we have a problem. We have had a deployment
plan we set out. The deployment plan called for us to continue
to outfit the entire nation by the end of this fiscal year. We
are about three months ahead of that plan and will deploy AIT
by July of this year.
Mr. DeFazio. Then on the EDSs, 54 according to this
inventory, these would be baggage screening EDSs. Why would we
have 54?
Mr. Nicholson. It could be a variety of reasons. It could
be because some are safety stock, a small number of those will
be safety stock. Another reason is we are doing facilities
modification at some airports to put in inline systems. That
facilities work normally takes about a year depending upon the
size of the project. We buy the stock to put in so that when
the facilities work is ready, we can deploy the units and make
the system complete.
Mr. DeFazio. Right, but we have airports that don't have
any EDS, we have 54 in stock and we keep a large number in
stock so that when someone finishes their inline system
sometime in the next 12 months, we will have machines there to
go.
What happened to just in time delivery? Why couldn't we
just have the machines delivered to that airport when their new
inline system is complete?
Mr. Nicholson. That is what we try to do, sir. We use six
regional managers and that is the job they try to serve to work
with the airports to have those ready and available and
sequence them in for the installation. It is the same approach
we take for the checkpoint technology.
Mr. DeFazio. Finally, when you go to an inline system and
you have the standalone units, what do you do with those
standalone units?
Mr. Nicholson. The standalone units, depending upon what
happens, you retire some of those. If you have standalone units
and they are replaced by the inline system, which is often the
case, those get eliminated.
Mr. DeFazio. Eliminated? What if you have airports that
don't have any EDS, why wouldn't you take a still functioning
machine and move it there?
Mr. Nicholson. Yes, sir, that is exactly what we do.
Mr. DeFazio. Thank you.
Mr. Lankford. [Presiding] I yield five minutes to myself.
Let me pick up on what Mr. DeFazio was just talking about,
Mr. Nicholson. Just in time delivery, I know very few
businesses in my district that don't do just in time delivery
and they will also order it, purchase it and then it is
delivered from the factory. Are these pieces of equipment
inspected and calibrated after they arrive at the airport?
Mr. Nicholson. Yes, sir. There are a couple of things on
that. Depending on the technology, there is a different
inspection regime. For example, the EDS we were just talking
about, the AT and AIT, there is normally an inspection that
takes place at the factory before we go. It is called factory
acceptance test and then we do a site acceptance test.
Mr. Lankford. Are you also inspecting when it comes to the
warehouse?
Mr. Nicholson. When it comes back to the warehouse.
Mr. Lankford. I am saying when it leaves the factory, it is
inspected before it leaves the factory. When it gets to the
warehouse, is it inspected again?
Mr. Nicholson. No, not until the site acceptance. The
manufacturer has the warranty on that. They pick it up for the
site acceptance.
Mr. Lankford. Is there a reason that it can't be just
delivered from the factory to the airport when it is ready,
when it is time?
Mr. Nicholson. In our earlier discussion on AIT, to make
sure we have the record straight on AIT, the inventory level of
the warehouse for AIT that we have I think is two right now.
Mr. Lankford. We are talking about probably pieces of
equipment, some that have been there six to nine months or a
year and you are saying the airport is getting ready in the
next year so you know when it is coming?
Mr. Nicholson. Right.
Mr. Lankford. Obviously there is a long lead up time, there
is plenty of time to contact the manufacturer and say one of
these nine months from now dropped and ready to go. You take
the nine months preparing the airport and then it is delivered
out?
Mr. Lankford. Right. The other situation you will have with
equipment that we buy for the airport is if you take a look at
our explosive trace detection equipment, for example, we have
8,000 units. Those are split between checked baggage resolution
and carry-on baggage resolution. The life expectancy of those
units or the service life, if you will, is about seven years.
You are replacing almost 1,000 or more every year.
Mr. Lankford. Is that seven years from the time it hits
your warehouse or the time it hits the airport?
Mr. Nicholson. Seven years from the time it hits the
airport. If we are going to buy those, we wouldn't buy them in
small lots. We usually buy them to get an economic quantity.
Mr. Lankford. I understand. It is typical manufacturing
procurement. You may buy it in multiple if it is part of your
agreement and hold them at the factory. You know you are going
to need 18, they have them, they manufacture them, hold them
there and ship them out just in time. That is a typical
agreement.
Mr. Nicholson. It depends upon how we structure our
agreement with manufacturers.
Mr. Lankford. Let me make a couple comments. I have met
some great people who work for TSA. I have no criticism of some
of the folks there but it is an incredibly chaotic environment
that you walk through, yelling, lots of long lines and not long
lines because of efficiency, it is yelling because somebody is
yelling bag check over here and it takes four or five minutes
for someone to wander over and check it. Then you have bag
check over there multiple times and hollering back and forth
and you see this frustrated group of passengers there.
I also see policies that are implemented that even the TSA
workers themselves don't understand why they have to do this
and it is especially frustrating to me when they interact with
constituents, senior adult ladies with a knee replacement that
are getting pat downs on that are absolutely humiliating to
them in the process.
I know we have had some discussion on what to do with
children and now people over 75, but this humiliating process
of going through the pat downs seems to be very unique to what
is happening in our airports. Can we document a single moment
that a putdown has discovered a threat?
Mr. Nicholson. I think the answer to that is yes, sir. I
don't have the specifics. I know we find weapons sometimes
through pat downs. We find several prohibited items that we
find through pat downs. We find several items that are
concealed on people that may or may not be the instrument of
terrorism but they are the instrument of something that is
illicit.
Mr. Lankford. Not just find something, not just a bottle of
shampoo or something. Mr. Lord, you look like you were leaning
forward. Do you have a response to that as well?
Mr. Lord. No, I don't. I am sorry to suggest I did.
Mr. Nicholson. For example, we found people with tens of
credit cards and false IDs taped to their bodies. We find folks
with tens of thousands of dollars taped to their body and
attempted to be concealed on their body. We find weapons that
are strapped to a body.
Mr. Lankford. You are talking about in a patdown?
Mr. Nicholson. Sometimes in a patdown or in resolution if
it shows up as an anomaly during technology screening.
Mr. Lankford. The issue comes back to what I mentioned
before, the senior adult lady with a knee replacement that if
they come to the Capital and it sets off the metal detector, we
have a wand. If you come to the airport, she is going to get
patted down and that is not a lot of fun for anyone.
I have had multiple times, Mr. DeFazio talked about it
before, of being patted down as I go through security. But it
is humiliating for a senior adult to go through that. I know
people I have talked with who say they have just stopped
flying. This is beyond just a safety issue, this is a
commercial enterprise and free movement of people around the
United States.
There is a unique balance that has to be abided where some
of this equipment helps us in that, as Mr. Chaffetz mentioned
before dogs can help us with that, but in moments that we can
get things out of the warehouse and into placement and go
through a process where we are not having to humiliate people
as they go through, we need to strive to achieve that.
Mr. Nicholson. You said it very close to how our
Administrator presents it. That is exactly what we are trying
to do. We are trying to take a risk-based approach to this and
modify our procedures and phase those in.
Mr. Lankford. Obviously, I fly often as well and I watch
the procedures changing consistently over time. There seems to
be this constant experiment that is going. It is a constant
sense of frustration that is also happening in the process as
well.
We are approaching a time for votes. It is getting very
close to the time it is going to end. I would like to put us in
recess for a moment until these votes conclude and call us back
in session after that.
With that, we will recess until after votes are concluded.
[Recess.]
Chairman Issa. [Presiding] The Hearing will reconvene.
Mr. Cravaack. Thank you, Mr. Chairman.
I would like to thank you, Chairman Mica and Ranking Member
Cummings for having what I consider a pretty important meeting
and trying to have the most efficient government as possible.
Mr. Edwards, it is good seeing you again, sir.
I would like to thank all the witnesses for coming here
today. I know it has been a tough day and I appreciate you
coming. The bottom line is we are trying to get an efficient
government as best we can.
One of the things we are all concerned with is right now
the national debt ticked up over $15.7 trillion today. It was
$15.6 trillion for a couple weeks and it is rapidly increasing.
We are just trying to bring down government costs and spending.
One of the proposals I have actually submitted, and you can
go to the website and take a look, but it addresses this issue
and making sure some of the baggage screening devices we have
had, we have over 600, I believe, and we have to get rid of
them, move them on and hopefully get some kind of reimbursement
out of it at the same time.
Under my proposal, the Federal Government could save about
$20 million in storage costs. That is pretty significant. Any
proceeds in selling the excess equipment could be used in
savings. We are trying on our part to make it as efficient as
possible.
In the investigations into some of the things we are trying
to cut, the Committee investigators discovered that 85 percent
of major transportation security equipment currently warehoused
are stored for longer than six months and 35 percent of the
equipment has been stored for more than one year. One piece of
equipment has been stored for more than six years and that is
60 percent of its total useful life.
Mr. Nicholson, I know you have been involved in a lot of
this but why is $184 million worth of screening equipment with
an annual leasing cost of more than $3.5 million in the
warehouse in Dallas? Can you tell us why that is?
Mr. Nicholson. Yes, sir. The inventory varies a little bit
as I mentioned. It sounds like that inventory might have been a
January-February time frame, 155 and we are under 150 now, I
think in inventory. From the perspective of 95 percent of the
value of our security equipment is in the field and in the
airports, at the same time I mentioned in my statement that 85
percent of the equipment is out in the airports and 15 at the
warehouses.
What that tells me when I look at my monthly reports that I
get on the status of the inventory are that we do have our most
expensive, which we generally think of as our most impacting
technology, is operationally deployed. It still is a lot of
material. The combined warehouses are a little over 400,000
square feet, so they are big warehouses but when you put it in
the context of what percent of the total equipment value is in
that warehouse, and consider that is our only transportation
security equipment warehouse operation. I think that gives
context to the operation.
Mr. Cravaack. I am assuming that you do have a plan to
dispose of this equipment?
Mr. Nicholson. Yes, sir, we do. Our next disposal is
scheduled for early June or late May. I think we are at about
1,000 pieces of equipment already and there will be more that
will be coming up to that point. Each year as part of our
financial audit, we have two wall to wall inventories, so we
capture and reconcile all the inventory in that.
In the past few years, because of several of the concerns
the IG had as part of doing that, they would accompany and
observe the inventory. One we did in the June timeframe, and
one we did just before the close of the fiscal year, usually
the last week in September, last two weeks in September.
Because of the progress that we have made in reconciling,
identifying, coding, addressing all those things that are found
wrong, this year TSA will do its June inventory by itself and
we will be joined in the September timeframe by the IG for the
final inventory. That is largely the result of last year when
we did the sample size for the value of the inventory at the
time, we had 100 percent success in identifying every piece of
equipment, its condition code and where it was in the
warehouse.
Mr. Cravaack. I have 14 seconds left, so with that, I will
yield back.
Chairman Issa. Thank you.
I guess I will recognize myself for a second round. I
apologize that voting tends to have this effect.
Mr. Nicholson, what do you say to the fact that you buy
more pieces of equipment than you have identified locations
for? In other words, you make purchases of equipment,
commitments to purchase and take delivery prior to figuring out
what airports they would or could go for and when asked, the
answer we got was it was a good buy, we made a larger buy
because we get a better price. Is that a sound way to do
planning?
Mr. Nicholson. I think it depends upon the piece of
equipment as far as the specific location. I say that because
each year as part of the appropriations process we provide a
list of all the projects we are going to do and all the
equipment. Before we execute any of the monies or purchases on
that equipment, we have to identify numbers units and the
projects they would go to.
Chairman Issa. Let me follow up then. If I hear you right,
what you are saying is the appropriations process drives bad
purchasing systems because you buy based on what you can
justify in appropriations, more or less?
Mr. Nicholson. No, sir, that is not so.
Chairman Issa. Why did the appropriations process work
there at all?
Mr. Nicholson. I think the appropriations process has
worked in that case.
Chairman Issa. But you bought more than you identified a
use for, you bought more than you needed and in some cases, the
stuff never actually went to the field before it became
obsolete, so what caused that to happen?
Mr. Nicholson. I think in some cases, there were
advancements in some technology. In the question that I
previously answered, we would get to things like explosive
trace detection equipment. There are several thousand pieces of
that equipment that serve our baggage screening process as well
as the passenger carry-on baggage process.
We don't always know the exact locations and we won't buy
with a specific location for each piece of equipment, but we do
have a forecast of when the service life of that equipment
would reach its completion, so we would buy a quantity for that
and later determine which airport gets those specific pieces of
equipment.
Chairman Issa. Mr. Edwards, when you did your
investigation, did you find these were reasonable assessments
of excess volume or in fact in some cases, long after they
arrived, even two years after they had not identified where
they would go?
Mr. Edwards. We started the audit mainly because the plant,
property and equipment, material weakness was reported in the
2008 financial statement. We looked back at 2010 and 2011 and
those material weaknesses still existed. First, you need to
have a transition plan and you have a procedural policy. You
have to have that and then you go back and see if it is
actually working.
For new equipment, you need to have a strategy and a
deployment plan for that and then for redeployment, if you are
taking some from an airport can that be used at a smaller
airport and how often you are going to review that. There
should be a limit on how long something stays in storage. Those
things need to be taken into consideration.
Chairman Issa. I appreciate that.
Mr. Lord, you haven't been asked nearly enough questions
and this one may be a little bit outside of your preparation.
Because we know we count on the GAO to get answers for
questions that somebody on a panel doesn't yet have, as we
reviewed in preparation for today's hearing, we discovered kind
of an anomaly.
Some of the money, of course, for TSA comes from regular
appropriations, some comes from fees. When they purchase excess
equipment and then dispose of it, but dispose of it in many
cases to other ``agencies,'' are we leaving if you will a back
door of excess purchases that are slightly out of date, new
technologies when they end up not being destroyed because they
are ``out of service,'' but rather, passed on to other
governments, do we create essentially a back door appropriation
if some of that money comes from user fees? By the way, are we
wasting user fees by allowing excess purchasing?
Mr. Lord. That is a very difficult question that I am not
prepared to answer.
Chairman Issa. That is why we give them to GAO.
Mr. Lord. If I understand your question correctly, you are
asking whether that poses any anti-deficiency act issue where
you are spending in excess of your appropriation. I would have
to look at that. It is clear they are disposing of equipment
and perhaps receiving revenue, so the question becomes is that
consistent with relevant appropriation law. I am not prepared
to answer that today but it is a great question.
Chairman Issa. Mr. Edwards, we recently had a Cabinet
officer who gave a grade to himself in this Committee, so I
will ask not the individual but you as the most direct
overseer, if you had to give for logistics management and
control TSA a grade 2008 and today, what grades would you give
them for each of those reporting periods?
Mr. Edwards. TSA has made some improvements, but there is
still a lot of work left.
Chairman Issa. D to a C minus?
Mr. Edwards. Somewhere in that range.
Chairman Issa. I want to thank you for your patience here
today. Mr. Edwards, I will tell you that our staff does intend
to follow up with the details of their visit, time lines and at
least a synopsis of what employees at the plant told them that
led us to believe that in fact it was not an ordinary disposal,
that people were brought in early specifically to get it out
and that our people were delayed so that the number on the
previously given inventory would come much closer to the number
that was going to be present but certainly not the number at
the time they had. We would appreciate your following up to get
the facts because we want to be accurate.
Mr. Edwards. Yes, sir, absolutely. As soon as I get the
information.
Chairman Issa. If you want a second round, go ahead. The
gentleman is recognized.
Mr. Cravaack. Mr. Lord, I was going to ask you in regard to
some of the history like the puffers that didn't work. What can
we do to make sure that we don't have that type of problem
again in regard to their redesign? Some of the equipment that
we have now, making sure it does what we need it to do, things
like that. Could you elaborate on that?
Mr. Lord. These are some of the same issues I discussed in
my written statement. I think it is really important to clearly
define your requirements up front, what you actually need and
not only get agreement within the component but at the higher
level within the department and the acquisition group that is
responsible for overseeing everything.
Even though DHS has done a good job in updating the
requirements and issuing new rules, you also want DHS to be
aggressive in conducting oversight and making sure people
follow the rules so to speak. At the department level, you need
that to occur.
At the component level, as some of the examples suggest in
my testimony today, you need the components, TSA, other groups
within the department to provide timely information to the
people trying to conduct oversight. Since there has been a
breakdown in the process, you need good flows of information
up, you need good flows down, you need clear roles, you need
someone responsible for conducting oversight and enforcing the
rules.
It is a very complicated process. That is probably the
simplest way I could explain it.
Mr. Cravaack. Complicated but important, making sure we
efficiently use the taxpayer dollars which I know you are
vigilant of.
Has the TSA developed a plan for identifying how to
approach the upgrades from currently deployed explosive
detection systems?
Mr. Lord. For the EDS, that was a recommendation we made in
our July 2011 report. We were concerned about that. They not
only have this large fleet of machines on the floor, so to
speak, but they are buying new machines. We didn't see a clear
plan for ensuring not only the new stuff but the old machines
were going to be capable of meeting the new requirements.
During the process, they also enhanced their explosive
detection requirements which poses a very complex problem but
we think they need to conduct better planning to ensure they
will meet those requirements.
Mr. Cravaack. The TSA does have a plan?
Mr. Lord. We are currently conducting follow up on that
report. They agreed with our recommendation, they are moving
out smartly to develop such a plan, but we haven't signed off
on it yet.
Mr. Cravaack. Thank you very much. I appreciate the
information today.
I yield back. Thank you.
Chairman Issa. I thank the gentleman.
I want to thank all of you for your attendance and
participation today.
We stand adjourned.
[Whereupon, at 3:06 p.m., the committees were adjourned.]

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