Government Can't Explain Increase in 2002 TSA Contract

On Feb. 26, 2002, one day after Pearson won the contract, a TSA official sent an e-mail that included a plan showing the agency's early interest in using hotels, according to a copy obtained by The Post. "It was one of the things we were looking at early, early, early on," said then-TSA official Joanna Lange, who sent the e-mail.

Two days after the contract was signed, TSA officials told Pearson to visit an air marshal assessment center at the Clarion Hotel & Convention Center in Atlantic City, according to documents and people familiar with the contract.

Two weeks later, TSA officials again requested that Pearson officials travel to Atlantic City for a detailed briefing about the air marshal process from federal law enforcement officials, documents show.

By March 29, 2002, the decision had been made to start using hotels. Within months, the program would include some of the nation's finest. Among them: the Waldorf-Astoria in Manhattan; the Hawk's Cay Resort in Duck Key, Fla.; the Wyndham Peaks Resort and Golden Door Spa in Telluride, Colo.

Pearson executives later said they were ordered to change their plan by Pamela Pearson, then TSA's director of workforce creation, according to company documents presented to government auditors. The reason they said they were given for the change: "Efficiency."

Pamela Pearson, who now works as a vice president for Covenant Aviation Security LLC, a private passenger-screener company in San Francisco, said she suggested that Pearson use the air marshal model.

"We didn't specify it had to be hotels," she said. "We did not dictate the method."

Pearson, who has no family relationship to the company, said she concluded the company's private assessment centers were too small, particularly for hiring at large airports. "We knew from the very beginning that it wasn't going to work," she said.

She added that the looming congressional deadlines played a crucial role. "We didn't have a choice," she said. "I don't think the costs really got discussed."

Pearson said she acted after discussions with Jackson.

"This did not happen in a single meeting," Jackson said. "This was the cumulative judgment of dozens and dozens of people, not only people at the TSA, but also people at Pearson."

Jackson said the deciding factor was the fact that NCS Pearson did not attract enough candidates to its own assessment centers when it was hiring screeners for BWI Airport in early June 2002.

"We went out to BWI, and we used it as a test bed," he said. "It just didn't work. We couldn't get the right number of people in the right amount of time."

But contracting documents contradict that. The documents show that Pearson executives were directed to use the air marshal approach by March, nearly three months before they screened candidates for the BWI jobs.

Pearson officials later told auditors for the Defense Contract Audit Agency that they believed that their plan would have worked. "The efficiencies of such an approach are obvious -- by utilizing an existing network of test centers, with existing infrastructure, the cost to TSA would be minimized," the company told the auditors, who were asked to review the burgeoning expenses by the TSA.

On April 9, 2002, Pearson executives warned TSA officials in a formal presentation that the switch to hotels would come at a steep price -- from $251 million to $680 million.

The change would require additional security, extra logistical support, and the movement of medical and testing equipment across the Western Hemisphere.

Pearson executives later told auditors that they had to set up and dismantle assessment centers at 153 hotels and facilities throughout the United States, Puerto Rico, Guam, Saipan and the Virgin Islands.

"When TSA directed Pearson to use the Federal Air Marshal model, at the very beginning of the project, we shifted gears and met their requirements," Pearson President Mac Curtis said in a recent statement.

Federal auditors eventually called into question an array of expenses, including charges of $525 for an airport shuttle trip in Tallahassee, $7,920 for beverage breaks at a Manhattan hotel and $514,000 to rent tents in Boston.

Pearson officials told the auditors that many of the issues concerning the expenses relate "to subcontracts that would not have been necessary absent such a dramatic shift in TSA's requirements."

The contract is now the subject of an investigation by the homeland security department's inspector general.

Jackson said the TSA did its best under the circumstances. "It was an extremely difficult ride," he said. "Things that would have taken years to do in the federal government, we were doing in days."

As for the lack of documentation, Jackson's spokesman, Russ Knocke, said: "It is not surprising that only limited records may exist. TSA concurs that under normal circumstances, more extensive documentation would have been drafted to reflect such decision."