Contractor Accused Of Overbilling U.S.

The tasks included outfitting the TSA's headquarters with laptop computers, cell phones and other digital essentials. The project called for giving TSA officials at airports access to high-speed networks, computers, BlackBerry devices and Internet services -- to plug communications gaps that made airports vulnerable.

In early 2002, TSA officials decided to launch a competition for the contract by using a little-known Transportation Department program begun in the 1990s to ease the purchasing of information technology. But the program, which speeds the process by pre-qualifying contractors and abbreviating competition, has had documented problems with oversight.

TSA officials also decided to award a nontraditional contract. Instead of the government providing detailed specifications to the contractor, the government would ask the contractor to determine what was needed, according to documents and interviews with government and company officials.

Both the competition and the contract would require extra vigilance by the government. But the TSA did not have the necessary procurement staff, according to government officials. "I frankly have to agree that the government is sorely lacking in that area," said Schambach, the former TSA chief information officer.

In August 2002, the TSA announced that Unisys had won the contract, which was set to last seven years, with a renewal required after three. The contractor would maintain ownership of most of the equipment, including the networking computers.

A year into the contract, the TSA had 25 contracting-oversight specialists. Today, it has 242. "That reflects how seriously we take oversight now," the TSA's Clark said.

Spending on the contract soon averaged more than $24 million a month, double the projected amount, contract documents show. Part of the reason, according to government and Unisys officials, was that the Homeland Security Department and the TSA were adding jobs to the contract beyond the original scope of the work. So far, the Homeland Security Department has added $94 million worth of work unrelated to the TSA's mission, including $2.4 million to launch a new Web site for the department.

By mid-2004, TSA officials were becoming concerned about labor costs under the contract. In June 2004, a TSA contracting officer sent an e-mail to the auditors asking for help to review Unisys's billings.

Auditors said they reviewed tens of thousands of hours of labor bills submitted by Unisys for the first six months of 2004. Under the contract, Unisys was supposed to enter employees into one of 103 labor categories, based on their education, work experience and other qualifications. In an examination of the timesheets of 80 Unisys employees, auditors discovered that Unisys had used the top labor-rate designation -- functional subject matter expert -- for employees who did not warrant it.

"We have found that Unisys has been billing the Functional Subject Matter Expert (FSME) labor category for employees who do not have the requisite knowledge and expertise," the auditors said in their referral to the Homeland Security Department's inspector general.

Those employees included a computer systems analyst with seven years' experience who auditors said should have been paid $53.75 an hour under the contract. Instead, the employee was billed to the government at $131.12 an hour as a subject matter expert, a worker whom, under guidelines, should have at least 15 years of experience.

In all, the auditors said they found 146,059 hours billed at the "functional subject matter expert" rates.

In response to the audit, Unisys said that it had wide latitude under the contract to choose the labor categories for its employees and that it made those choices based on education, work experience, academic background and other factors. Unisys officials said that when they had trouble matching their employees to contract-labor categories, they opted for the highest category as a "catch-all."

The auditors also reported that Unisys and its subcontractors billed the government for 24,982 hours' worth of overtime that was not permitted under the contract. The overtime billed appeared to represent "100 percent profit to Unisys," the auditors concluded.

Conaway said Unisys believes it is allowed to bill for overtime under the contract and is disputing the auditors' findings.

TSA officials recently called Unisys's performance "acceptable." In a statement to The Post, the agency noted that the government had paid the company "a minimal amount of incentive fees in the contract" -- $972,000 when Unisys was eligible for $44 million.

The Unisys contract is about to hit the $1 billion ceiling. With work on the project far from finished, some officials within the TSA wanted to put the remaining four years of the project out for competitive bids. But that suggestion was shelved. Instead, the TSA is negotiating a new contract with Unisys.

Staff researchers Alice Crites and Meg Smith contributed to this report.