Unisys Gets Extension On Security Contract

Unisys Corp. faces allegations that it overbilled for a Transportation Security Administration contract.
Unisys Corp. faces allegations that it overbilled for a Transportation Security Administration contract. (By Joe Raedle -- Getty Images)
By Robert O'Harrow Jr. and Scott Higham
Washington Post Staff Writers
Wednesday, January 11, 2006

The Transportation Security Administration has awarded Unisys Corp. a $750 million extension to an information-technology contract that was set to expire yesterday, even as the company remains under scrutiny for allegations that it overbilled the federal government for more than 171,000 hours' worth of labor on the project.

TSA spokeswoman Yolanda Clark said yesterday that the agency has hired a private consultant to review the résumés of Unisys employees to determine whether they were paid exorbitant labor rates, as alleged in two audits conducted by the Defense Contract Audit Agency. Clark said the consultants are preparing to report their findings this month.

"This contractor will provide an independent assessment matching personnel qualifications of Unisys employees with the [government's] contract-labor categories," Clark said.

Under the contract extension, Unisys is continuing its work on a high-speed network linking TSA offices, the agency's security operations centers and the nation's major airports. Unisys also will provide information-technology systems to the Homeland Security Department.

TSA officials had estimated that the original contract, awarded after a brief competition in 2002, would be worth as much as $1 billion over seven years. But the project is costing more than double the anticipated amount per month, in part because homeland security officials expanded the requirements. TSA officials now estimate the work could cost as much as $3 billion.

The TSA decided to grant Unisys a sole-source "bridge" contract extension instead of rebidding the project, in part because the company maintains ownership of most of the equipment. Agency officials said they also concluded that it would be more efficient to continue with Unisys until a new technology contractor takes over for the entire Homeland Security Department, probably in the next two to three years.

In the two reviews of the contract conducted in 2004, federal auditors found that Unisys charged up to three times more per hour than was justified for lower-level employees, according to copies of the audits obtained by The Washington Post last fall. In one instance, Unisys allegedly billed taxpayers $131.12 per hour for a technical writer who should have made no more than $46.43 per hour. In another, a worker with seven years' experience was billed to the government as someone who had at least 15 years of experience -- and paid more than double the amount that was justified, auditors said.

The findings of "suspected irregularity" were referred by auditors at the Defense Contract Audit Agency to the Office of the Inspector General at the Homeland Security Department. The inspector general's office has begun its own examination of the contract while the TSA is conducting its internal review of the billings.

A Unisys spokeswoman said company officials were unavailable to comment yesterday. The company issued a statement saying it was "proud to continue its support of DHS and TSA" and was working with the agency to answer questions raised by the government auditors.

A Unisys official previously told The Post that "there certainly was no attempt here to commit any type of misdeed," attributing the questions about billing to lapses in "our internal processes." The rising costs of the contract were due to unexpected demands from the TSA and the Homeland Security Department, according to the Unisys official.

After The Post published the findings of the audits on Oct. 23, Unisys's stock price fell by nearly 20 percent. The price rebounded after Unisys assured investors that the value of the alleged overbilling represented a small proportion of the contract. But the extent of questionable labor costs remains unclear because auditors only examined six months' worth of billing, according to the Defense Contract Audit Agency.

"We found significant internal control weaknesses regarding the reliability of the recorded labor hours," said one audit dated Oct. 8, 2004. "Our evaluation disclosed that numerous, untimely, and insufficiently documented" changes were made to timesheets.

To address the audit questions and improve oversight of the contract, the TSA and Unisys began a program in 2004 they called "Project Bedrock." The company and the agency plan to review labor bills to ensure they were properly matched to the level of work experience and pay of the Unisys employees.

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