Government Can't Explain Increase in 2002 TSA Contract
Homeland Security Office Says It Lacks Documentation on $343 Million Change

By Scott Higham and Robert O'Harrow Jr.
Washington Post Staff Writers
Sunday, October 9, 2005

In the wake of the Sept. 11 terrorist attacks, the government changed a contract to hire federal airline passengers screeners in a way that cost taxpayers an additional $343 million. More than three years later, officials cannot explain exactly why.

Homeland security officials say they have no memos, e-mails or other paperwork to document the reason for the change, as required by federal contracting regulations. They have also offered accounts of the decision that conflict with internal government documents obtained by The Washington Post.

The modification to the contract involved switching the interview sites for tens of thousands of airline passenger screener jobs from a contractor's own assessment centers to hotels and luxury resorts.

The change added hundreds of millions of dollars to a contract that increased from $104 million to $741 million in nine months. Federal auditors later called into question $303 million of that spending.

Homeland Security Department officials said the change was made in collaboration with the prime contractor, NCS Pearson Inc. They said the deciding factor was Pearson's failure to attract enough screener candidates to its own testing centers while hiring for Baltimore-Washington International Airport.

Documents and interviews, however, show that the decision was contemplated before the contract was signed and was imposed by government officials well before the BWI project. Pearson officials said they never had a chance to try out their own testing approach.

Michael P. Jackson, deputy secretary of the Homeland Security Department, said in a recent interview that the agency does not have paperwork to back up its account and that he cannot recall the details surrounding the decision.

"Honestly, I have no memory of it," said Jackson, who said he was ultimately responsible for the contract as second-in-command at the Transportation Department in 2002.

On Feb. 25, 2002, the Transportation Security Administration, then part of the Transportation Department, accepted a proposal from Pearson, an education testing company, to use its own network of 925 private assessment centers to interview, test and hire tens of thousands of passenger screeners.

At the time, the federal government also was hiring a fresh force of air marshals to provide protection on commercial flights, using what is known as the federal air marshal model.

That approach called for the use of a centralized hiring location set up at a hotel to fill a couple of thousand jobs.

Documents show that TSA officials wasted little time in discarding Pearson's plan for the private assessment centers in favor of the hotel approach.

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."

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