Kerry Adds Transparency to TSA Contracts, Repeals Small Business Exemption

News Release

Kerry Adds Transparency to TSA Contracts, Repeals Small Business Exemption

Jul 27, 2007 1:27 PM (3 hrs ago)
From U.S. Senate Committee on Small Business and Entrepreneurship,
Distributed by PR Newswire

WASHINGTON (Map) - Senator John Kerry (D-Mass.) successfully attached an amendment to the Homeland Security Appropriations Bill last night that will hold the Transportation Security Administration (TSA) accountable to federal contracting laws. TSA was exempted from the Federal Acquisition Regulations in the aftermath of the September 11th terrorist attacks, but years of contract mismanagement provides no justification for the continued exemption. Last year, Kerry secured a similar measure to the department's spending bill, but the Republican Congress stripped the language that would protect an open, competitive bidding process and ensure small business contracting opportunities.

"Why should an agency fraught with wasteful spending and contract mismanagement continue to receive a free ride while every other major federal agency must abide by the law? The taxpayers deserve better. Our small businesses deserve better. This change to bring transparency and accountability to the TSA is long overdue," said Kerry, Chairman of the Committee on Small Business and Entrepreneurship.

In 2003, the TSA awarded a federally prohibited "cost-plus-a-percentage" contract to Boeing which increased in cost from $508 million to $1.2 billion. Boeing was paid $49 million in excess profit, received $82 million to cover $39 million in costs, and ultimately received a 210 percent return on its investment.

In 2002, the TSA issued a contract to Pearson Government Solutions to recruit airport screeners that increased from $104 million to $741 million over nine months because the TSA insisted that Pearson use posh hotels, including the Waldorf Astoria, as assessment centers instead of its own locations.

Last year, the Government Accountability Office reviewed the on-going Boeing contract and found that poor contracting oversight continues to plague the agency. The GAO also found the Department of Homeland Security's contracting divisions "are still operating in a disparate manner with oversight of acquisition activities left primarily up to each individual component."

Kerry's amendment will require TSA to follow government-wide, statutory contracting goals, which establish that at least 23 percent of federal contracts go to small businesses, with smaller percentages directed to disadvantaged business communities, including socially and economically disadvantaged businesses, women owned businesses, and service disabled veteran owned businesses. The TSA must be in compliance with the Federal Acquisition Regulations within 180 days.

Kerry's amendment has been endorsed by Citizens Against Government Waste and the Professional Services Council, the principal trade association representing federal contractors.

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